Rabobank Predicts Cocoa Price Rally Has Reached Its Zenith

Cocoa Prices Have Likely Peaked, Says Rabobank Analyst

Paul Joules, an analyst at Rabobank, has suggested in a client note that cocoa prices have likely reached their peak following a significant drop in recent weeks.

Factors Influencing Cocoa Prices

Joules attributed the peak and subsequent crash in cocoa prices to a combination of declining global demand and responses from producers, particularly those without a fixed farmgate price. He suggested that these factors would help to mitigate the current uncertainty surrounding futures pricing.

Future of Cocoa Prices

Despite the recent crash, Joules predicted that elevated cocoa prices would persist for several years to come. He noted that while prices are unlikely to return to 'normal' levels quickly, they have likely passed their peak.

Cocoa Futures and Market Conditions

Cocoa futures reached their peak in New York on April 19, just above the $12,000 a ton mark, before crashing 43%. Prices hit a low of $7,000 and have since been trading just below the $9,000 level. Traders are closely monitoring crop conditions in West Africa, a key cocoa-growing region that has been negatively impacted by adverse weather and disease, resulting in the third consecutive global deficit.

Weather Conditions and Market Liquidity

New data from Maxar Technologies indicates expected rainfall across the Ivory Coast and Ghana in the coming five days, which could improve soil moisture in these cocoa-growing areas. In a separate report, analysts from BMI, a Fitch Solutions unit, argued that the cocoa crash was not related to market fundamentals but was entirely due to market liquidity.

Future Cocoa Price Predictions

Rabobank forecasts that cocoa prices in the fourth quarter of 2024 will average around $7,000. However, commodity trader Pierre Andurand maintains his $20,000 price target for later this year.

Closing Thoughts

The cocoa market's recent volatility raises intriguing questions about the future of commodity prices and the factors that influence them. What are your thoughts on this matter? Do you agree with Rabobank's prediction, or do you side with Pierre Andurand's optimistic forecast? Share your thoughts and this article with your friends. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.