Cocoa Prices Hit Two Year Low As Chocolate Consumption Falters
Tyler Durden
Sun, 07/19/2020 – 08:45
ICE Europe cocoa futures plunged Thursday to a near two-year low as data showed “sharp falls” in European demand for 2Q20 amid oversupply fears, reported Reuters.
Brussels-based European Cocoa Association said Thursday Europe’s 2Q cocoa grind plunged 8.9% from a year earlier to 314,108 tons, making it the lowest quarterly grind in five years.
Cocoa grind is a proxy for demand. Virus-related lockdowns have not been sweet for chocolatiers.
Swiss chocolate maker Barry Callebaut reported last week a 14.3% decline in last quarter sales as volumes sold to retail clients were halved.
ICE Europe cocoa futures plunged into a bear market in early July with prices down 24% in 22 weeks. The plunge in prices started around the time the pandemic began (late January/early February).
We noted last month when cocoa prices hit a one year low, the virus-induced global recession wrecked consumption and love for chocolate.
Carlos Mera, a commodity analyst at Rabobank, told Financial Times the plunge in prices reflected consumers slashing discretionary spending. “The main factor is people are not in a celebratory mood,” he said, referring to the downturn in the global economy.
Some commodity analyst uses the bean as a barometer of the economy because chocolate sales are highly dependent on consumers. So the break lower in cocoa prices could suggest the global economy is not recovering in a “V” formation but rather an “L.”
via ZeroHedge News https://ift.tt/3hed3d3 Tyler Durden