Chocolate is experiencing a resurgence in popularity in Europe that may be unparalleled.
Last year, the continent processed 1.46 million tons of cocoa beans into butter and powder for confectionery items, a 6.1% increase and the most since data began in 1999.
This comes after a surge in Asian processing, and North American data is due on Thursday. As a result, cocoa futures continued their surge.
Charles Branch, head of softs and agricultural commodities at Britannia Global Markets in London, said by email “it’s further proof that consumers have found their sweet tooth during the pandemic.”
With prohibitive freight and fertilizer costs creating cost headwinds, strong demand is eroding stocks in Europe and the United States.
Inflationary pressures are being fueled by rising energy prices. March futures surged as much as 1.9% to $2,680 a ton, extending the year’s gains to over 6%.
During the most recent rally, the number of outstanding contracts increased, indicating renewed investor interest. Prices are also rising as a result of a broad commodity rise.
Traders, on the other hand, are keeping a watch on how new lockdowns may affect demand. Unseasonal beneficial rains in the top shipper Ivory Coast may also help to enhance supplies. Coffee, sugar, cotton, and orange juice were among the other commodities that saw advances in New York.
A stronger Brazilian real aided the futures since it reduces the incentives for the agricultural powerhouse to sell commodities priced in the greenback. Following terrible losses last year, adverse dryness in major South American growing areas is increasing concerns about output.
Cotton gained 1.8% to $1.2331 a pound after hitting a new decade high of $1.2387.
Prices are being weighed down by tight supply and concerns about the outlook for the upcoming crop in the United States, the world’s leading exporter, with problems in Asia adding concerns.
While there had been early hopes for a rise in American fiber planting in 2022-23, Citigroup Inc. stated in a study that due to rising fertilizer prices, such predictions might be dropped.
Drought in Texas, the US largest producer, is also raising concerns about output in the next year. Sugar exports from India may be unstable, as prices have fallen below growers’ breakeven points.
Last season, a government subsidy propped up the markets there, but that has now ended, according to Michael McDougall, managing director of Paragon Global Markets.
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