Cocoa Futures Reach 7-Month High Due to Issues in West Africa

Cocoa futures have reached their highest level in seven months due to production concerns in West Africa. This situation could impact global supply against already low stock levels. The most active cocoa contract climbed to $10,380 per ton, marking a rise of up to 5.4%, reaching its highest point since April 29.

This rally has brought cocoa prices back to the high levels seen earlier in the year. The rebound is attributed to challenging weather conditions in key cocoa producers Ivory Coast and Ghana.

Steve Wateridge, head of research at TRS by Expana, noted the recent decline in production outlook, stating, "The mid-harvest outlook has worsened in recent weeks." Wateridge also added that the weather conditions over the next three months will be critical in determining whether the situation will worsen further.

The main cocoa-growing regions in West Africa are currently experiencing the Harmattan season, characterized by dryness that can reduce soil moisture and negatively impact crops.

According to weather forecasting company Maxar Technologies Inc., the lack of soil moisture and minimal rainfall are not conducive for supporting crop growth mid-year. This development has raised concerns among market participants about a potential tightening of cocoa supply.