Dollar Weakness Sends Cocoa Prices Soaring
Cocoa prices are rising sharply as the dollar weakens, driven by favorable weather conditions in major cocoa-producing countries.
The US Dollar Index (DXY) hit a two-and-a-half-month low today, boosting cocoa prices. The September ICE New York cocoa contract is up 5.32% to $305, while the London cocoa contract is up 4.05% to $167.
Favorable weather in Ivory Coast and Ghana has led to new flowering on cocoa trees ahead of the main crop harvest next month. Cumulative data from Ivory Coast shows a 20% increase in cocoa shipments to 2.11 million metric tons (MT) this marketing year, compared to last year.
Rising cocoa inventories are negative for prices, but production is strong. Ghana's cocoa regulator, COCOBOD, projects a decline in production due to swollen shoot disease, aging cocoa farms, and the likelihood of adverse weather from El Niño. However, Ghana has already harvested 750,000 MT of cocoa this season, up 25.6% from last year.