Global Cocoa Supply is on the Rise
Valentine’s Day takes place tomorrow, and if you live in a country where this day is celebrated, you probably understand how important it is not to forget it. According to various researches, around 70% of North Americans will give chocolate or candy to their sweethearts on Valentines, spending, according to estimations, around $1.7 billion. This year though, they could be paying less for it.
Why? Cocoa supplies have been swelling thanks to bigger harvests in Latin America and West Africa, regions which are responsible for roughly 70% of all global production. The output led to a drop in costs for many companies.
Now, finally, the prices for shoppers are starting to drop. Cocoa price is down by over 34% since September and is now at a level not seen since 2011.
Moreover, as supplies swell, global demand decreases – probably since consumers are becoming more aware to health issues. According to Barry Callebaut, the world’s top cocoa processor, chocolate sales worldwide fell 2.3% in the three months through November.[i]
If costs will decrease further, it could help boost demand, which in turn will lower the global surplus. However, cocoa being an agricultural commodity, nothing is certain. In specific regions in the Ivory Coast, crops received hardly any rain in the past two months and if this top producer fails, anything can happen.
At iFOREX you have the opportunity to invest in cocoa CFDs, as well as in many other agriculture commodities in the form of CFDs. You can always choose to short or long your position, potentially benefiting from any change in price – up or down.
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