Cocoa futures soared to the highest price in more than 28 months after crop threats in Indonesia added to supply concerns as climbing demand for chocolate fuels a global shortage.
Western parts of Indonesia’s Sulawesi island, the main growing region, received more than double the normal rainfall this month, increasing the risk of crop disease, MDA Weather Services forecast today. World cocoa demand will outstrip supply by 105,000 metric tons in the year started Oct. 1, followed by a shortage of 74,000 tons the next season, Macquarie Group Ltd. estimates.
Global sales of chocolate confectionery will reach a record in 2014, according to Euromonitor International Ltd. Cocoa futures jumped 34 percent in the past year, trailing only natural gas among the 24 commodities tracked by the Standard & Poor’s GSCI Spot Index. Ivory Coast is the biggest grower followed by Ghana and Indonesia. Tighter supplies will mean higher costs for food makers including Nestle SA, Barry Callebaut AG and Lindt & Spruengli AG.
“When you already have a tight supply situation, any weather issue in these growing regions will exacerbate the deficit,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “Supply just can’t seem to catch up with demand.”
Cocoa for March delivery increased 0.6 percent to settle at $2,905 a metric ton at 12:06 p.m. on ICE Futures U.S. in New York, after reaching $2,933, the highest since Sept. 8, 2011.
“Too much rain is not good for cocoa, and it’s a concern,” Judy Ganes-Chase, the president of J. Ganes Consulting in Panama City, Panama, said in a telephone interview. Signs of climbing supplies from West Africa may help to cap the rally, she said.
Global stockpiles probably fell 17 percent in 12 months through Sept. 30, the London-based International Cocoa Organization said today. In the fourth quarter, grindings, a measure of demand, increased in Europe, North America and Asia, industry data showed this month.
Money managers have held a net-long position, or bets on higher prices, since July 2012, according to U.S. government data. The price for cocoa butter rose 3.4 percent last week, extending a rally in the past 12 months to 68 percent.