Cocoa futures jump on Ghana's plan to restrict some supplies
TLDR
- Cocoa futures soar as Ghana plans to restrict some supplies for upcoming season, sparking fears of shortages.
- Ghana, 2nd largest cocoa producer, to determine specialty cocoa sales based on total production, allocating beans fairly among buyers.
- Active cocoa futures contract in NY jumps 6.4% on speculation, recording significant single-day surge.
Cocoa futures surged as Ghana's plan to limit some supplies for the next season stoked fresh concerns about ongoing shortages.
Ghana, the world's second-largest cocoa producer, has informed buyers that it will decide how much of the next crop can be sold as specialty cocoa based on total production. The regulator will also allocate beans "equitably" among buyers, per a Bloomberg report last week.
On Monday, the most active cocoa futures contract rose by as much as 6.4% in New York, marking the biggest intra-day increase in over a week.
Key Takeaways
The move to restrict some purchases indicates concerns that Ghana's next cocoa crop may not recover as significantly as some expect, even with favorable weather and timely supplies of pesticides and fertilizers. While a good balance of sun and rain in West Africa benefits crop development, cocoa markets are expected to remain volatile until clearer signs of recovery occur. Although prices have eased from record highs, due to expectations of better supplies next season, they remain up roughly 90% this year following poor harvests in West Africa.
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