The world of commodities has seen significant fluctuations recently, with cocoa and coffee prices reaching record highs. According to a recent report by Citi, these prices could climb even higher due to adverse weather conditions and a strong demand for these commodities.
Cocoa and coffee have been in the spotlight mainly, drawing attention from investors and industry watchers alike.
In New York, the benchmark for cocoa futures saw a slight decline but remained high at $9,370 per metric ton. This comes after prices broke through the $10,000 barrier, marking a more than 120% increase within the year. Citi analysts suggest that prices might stabilize between $9,000 to $10,000 per metric ton shortly. However, they also hint at potential volatility in the latter half of the year, which could see prices either dip or soar based on demand and supply dynamics.
The El Niño weather phenomenon, characterized by elevated sea temperatures in the eastern Pacific, has exacerbated conditions for cocoa and coffee production. In West Africa, which produces about 70% of the world's cocoa, difficult weather and disease have severely impacted output. Similarly, a heat wave in Vietnam has affected Robusta coffee production, indirectly boosting the prices for premium Arabica beans.
Citi remains cautious about cocoa prices, maintaining a slightly bearish outlook through to the end of the year and into 2025. This caution stems from the challenges faced by major cocoa-producing regions and the variable nature of global demand.
As for coffee, the outlook is a bit more optimistic in the short to medium term, driven by the current production setbacks and market dynamics. Arabica coffee futures have recently surpassed $2 per pound, with Citi adjusting its expectations to reflect a potential price range of $1.88 to $2.15 for the year 2024. This adjustment indicates a recognition of the tight supply and robust market demand.
Citi's Price Projections for Cocoa and Coffee
| Commodity | Short-Term Forecast | Mid-Term Forecast |
|---|---|---|
| Cocoa | $9,000 - $10,000/ton | $7,000 - $12,000/ton |
| Coffee | $1.88 - $2.15/pound | Up to $2.2/pound |
This table showcases Citi's price projections, reflecting the volatility and uncertainty in the commodities market. With the ever-present influence of climate conditions and global demand, investors and consumers alike are keeping a watchful eye on these developments.
