Crazy Cocoa
The commodities market is offering a sharp lesson in the dangers of momentum trades and parabolic moves.
The ICE July cocoa contract at one point early Tuesday had plunged 12.5% to $7,812 a metric ton, adding to a 15.7% loss on Monday, the biggest one-day fall ever, as speculators bailed out.
The sharp two-day reversal has come as a jolt to cocoa bulls, who have participated in one of the commodity sector’s most spectacular runs of recent years.
The price of cocoa hit a record high above $11,000 a metric ton earlier this month as poor harvests in west Africa, particularly the Ivory Coast, delivered a supply crunch while demand for the commodity, the essential ingredient for chocolate, remained sturdy.
Candy (and gum) prices are up 7.5% compared to last September and Americans are expected to spend $3.6 billion on candy in 2023, according to the National Retail Federation.
Blame cocoa prices, in part, for the surge. The key ingredient in chocolate saw prices jump 61% this year due to rains delaying the harvest. That’s impacting manufacturers, such as Hershey and Mars.
(https://fortune.com/2023/10/30/halloween-candy-price-increases-chocolate-cocoa-inflation-shortage/)
What in the world are prices for Halloween 2024 gonna look like?
It's not trending optimistically at all.
Grace & Peace & Love to you all -
Matt
