Cocoa Prices Hit New Record High As Talks In Ghana Suggest Delayed Deliveries Of Beans

Cocoa futures jumped to a record high in New York on Thursday morning as traders confronted new supply problems in Ghana, the world’s second-largest cocoa producer. 

Bloomberg reports that the Ghana Cocoa Board, the regulator, is speaking with major commodity traders about delaying the delivery of 150,000 to 250,000 tons of cocoa until the next growing season due to dwindling bean supplies. The traders are demanding massive discounts for the possible delay. 

Talk of a delay was enough to push cocoa futures in New York to a new intraday record high of $10,771 per ton around 0510 ET. Prices have surged above the $10k mark as the world faces another year of supply deficits.  

However, as prices march higher, Bloomberg’s Javier Blas pointed out, “Liquidity in cocoa markets is quickly evaporating. The number of outstanding contracts (open interest) in New York and London combined has tumbled 40% since mid-January. NY open interest is at a 12-year low.” 

Liquidity in cocoa markets is quickly evaporating.

The number of outstanding contracts (open interest) in New York and London combined has tumbled 40% since mid-January. NY open interest is at a 12-year low.#cocoa #chocflation

— Javier Blas (@JavierBlas) April 9, 2024

Cocoa harvests have plunged into a deficit for the third year because of poor harvests across the West African nations of Ghana, the Ivory Coast, Cameroon, and Nigeria. Bloomberg said, “Between October and February, cocoa shipments from the Ivory Coast were 32% lower than the same time the year before.” The deficit has pressured traders, processors, and chocolate makers to secure supplies. 

A new Hightower Report said, “West African near-term supply remains very tight at the start of the mid-crop harvest, and that has provided underlying support to the cocoa market.”

Still, on Wednesday, Barry Callebaut AG, which supplies some of the biggest candy companies, told investors it’s “well covered” with cocoa supplies. 

However, Kemofina AG, a Swiss cocoa supplier, was sued by US commodity broker R.J. O’Brien & Associates LLC, claiming the company failed to provide enough collateral to cover losses on bearish bets. 

According to a complaint filed on Wednesday in Chicago federal court, R.J. O’Brien liquidated the Swiss firm’s bearish bets in the cocoa market. Closing out the position left Kemofina with a debit of $2.89 million, and the broker claims the Swiss company refuses to pay it. 

Last week, Bloomberg said oil trader Pierre Andurand forecasted cocoa futures “could break $20,000 later this year.” 

The bad news for consumers is the costs for US chocolate producers are hyperinflation. 

Soaring chocolate prices could only mean elites on private jets and mega yachts will only be able to afford the delicacy. Perhaps Bill Gates and other billionaires keen on resetting the global food supply chain will push fake chocolate cricket bars for the poors.