The price of cocoa has chocolate makers in deep distress as cocoa futures jumped to a record level, surpassing $7,000 for the first time in a long time. According to market analysts, cocoa futures show no sign of slowing down, with one contract reaching $7,096 last Tuesday, Bloomberg reports.
The Commodity Futures Trading Commission reports that traders in both London and New York have bet around $8.7 billion claiming prices will continue to rise, per the Financial Times.
“Various speculative traders that have not been trading cocoa for a long time have now jumped in,” said Harold de Boer, managing director at Transtrend, a Rotterdam-based quantitative hedge fund, as reported by FT.
Another contributor to the cocoa price hikes is bad weather conditions on top of disease that affects the trees in parts of West Africa, making supply hard for cocoa processors to come by and meet the demand.
Unfortunately, high futures don’t mean profits for cocoa farmers in West Africa.
For farmers in Ghana and Ivory Coast, the world’s largest cocoa bean suppliers, this means that government-controlled bodies set farmgate prices and the growers only see the profits 12 and 18 months later.
“The current [market] prices will be reflected in the farmers’ pockets at the start of the new season at the start of October,” Fuad Mohammed Abubakar, head of the Ghana Cocoa Marketing Company told FT.
