Cocoa futures headed higher for a sixth straight session on Friday, with prices poised to mark another settlement at their highest in more than 46 years.
“The availability of cocoa from West Africa remains restricted and projections for another production deficit against demand for the coming year are increasing,” Jack Scoville, vice president of The Price Futures Group, wrote in Friday report.
“Traders are worried about another short production year and these feelings have been enhanced by El Niño that is threatening West Africa crops with hot and dry weather,” he said.
Cocoa futures saw their most-active March contract
CCH24,
CC00,
edge up by $45, or 0.9%, to $5,001 per metric ton on the ICE Futures U.S. exchange in Friday dealings, on track to settle at their highest in over 46 years.
Prices settled Thursday at $4,956 — the highest finish for a most-active contract since July 20, 1977, according to Dow Jones Market Data. They climbed 15% in January, marking the best monthly gain since November 2020.
There are concerns that “dry weather fanned by Harmattan winds could affect the mid-crop harvest in West Africa, which begins in April, analysts at Commerzbank wrote in a note dated Friday. Harmattan is defined as cool dry wind blowing from the northeast or east in the Western Sahara.
“The cocoa harvest is already lagging well behind the previous year’s level, the analysts said. Estimates by exporters show that arrivals in the ports of the Ivory Coast, which are by far the largest cocoa-producing country, were 35% lower from the start of the harvest year in October to the end of January, compared with the same period last year, they said.
That means the cocoa market is likely to face a supply deficit for the 2023/2024 crop year for a third year in a row, the Commerzbank analysts said.
This story originally appeared on Marketwatch
