Cocoa related exchange traded notes surged Monday as a national strike in Nigeria, the fourth largest producer of the soft commodity, and poor weather conditions pressured the supply outlook.
Cocoa futures rose 7% Monday, their largest gain since October 2009, reports Marvin G. Perez for Bloomberg.
In 2011, cocoa pries plummeted 31%, the largest annual decline since 1999, on higher output from the Ivory Coast, the world’s largest supplier of cocoa.
Cocoa prices spiked after Nigerian workers began a national strike Monday. Disgruntled workers aren’t getting enough pay since prices have fallen more than 40% and the government removed fuel subsidies, which left farmers with higher costs.
“Whenever you see a country being immobilized, you run the risk of exports not moving at all,” Hector Galvan, a senior commodities broker at RJO Futures, said in the Bloomberg report. “Nigeria is not Ivory Coast, but when all is said and done, it’s one of the top producers.”
The high cocoa prices may also be attributed to dry desert Harmattan winds in the Ivory Coast and robust fourth-quarter grind figures, according to a Wall Street Journal report.