Sweet stuff is going on a run. Both cocoa and sugar exchange traded notes (ETNs) have been ticking up higher as the prices of those commodities gain sharply. What’s causing it and how long can this last?
Although a slight drop in demand has been seen in the markets for cocoa, the commodity has risen to levels seen not seen in months. Worldwide, production is down, although cocoa is still used frequently. We eat it, drink it and use it as gifts, for comfort and for treats.
Julian Murdoch for Hard Assets Investor reports that cocoa futures have gained 20% since July, and despite some volatility, prices are poised to climb further. The world’s top five cocoa producers are Ivory Coast, Ghana, Indonesia, Nigeria and Cameroon. These five countries are responsible for roughly 70% of global cocoa production each year. Rain and disease, however, could interrupt production.
The Ivory Coast has been riddled with black pod disease that has affected crops, as has too much rain. If this continues, it could support the levels at which prices currently reside.