Projections for the upcoming African mid-crops continue to be revised downwards, fuelling expectations that the projected global deficit in the cocoa bean market could widen further. Adverse weather, aging plantations and poor use of fertilizers are negatively impacting production in a context of relatively rigid demand.
Areté's 23/24 global fundamental projections have been updated and show a market supply level well below the data published by the International Cocoa Organization (ICCO) in February. In particular, compared to a 23/24 global deficit forecast by ICCO of 374.000 t, Areté expects a deficit of over 480.000 t, the largest deficit recorded since the 60/61 campaign.
The deterioration of supply fuels the record bullish trend that characterizes the financial markets of the cocoa bean. Since the beginning of the year, the prices in London and New York have registered a +170% and a +169% respectively. The prices of the first transformations mark increases more than proportional compared to those of the raw material, since the beginning of the year the references on the German market of butter and cocoa mass have increased respectively by 313% and 285% thanks to increases, also seasonal, on the ratios.
The uptrends are further amplified by relatively high net long trading in financial markets by traders, uncertainty over the effects of EU anti-deforestation rules, falling stocks and container costs supported by geopolitical tensions in the Red Sea.
