Cocoa in Short Supply? Cocoa Futures on the Move

Cocoa in Short Supply? Cocoa Futures on the Move

Just caught this informative piece on Seeking Alpha which makes a bullish case for cocoa futures, due to very tight supply.

What’s driving cocoa prices higher? Supply, supply, supply.

Back in February of 2008, tight supplies were forecast in the cocoa market, along with higher prices. Analysts called for a 14% rise in cocoa prices in the U.S., which would have pushed prices up to $2,325/tonne.

They underestimated the move: Despite the broader pullback in financial markets, cocoa in NY was sitting at $2,626/tonne on Friday, December 26. If NY cocoa hangs tight, it could end the year some 30% up – an outstanding performance given the other pricing trends in commodities right now.

Music to my “long cocoa” ears.

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