Cocoa prices posted moderate losses Monday as the strength of the U.S. dollar put downward pressure on the market. The decline aligns with broader trends where the dollar’s rise impacts commodities priced in the currency, making them more expensive for international buyers. The movement in cocoa prices is a key development for investors and stakeholders tracking commodity markets, particularly in the agricultural sector.
The changes in cocoa futures are important given their impact on global trade and local economies dependent on cocoa production. This shift in cocoa prices coincides with fluctuations seen across various commodities, reflecting the interconnected nature of global financial markets. The volatility indicates an area closely watched by traders considering strategies to hedge against currency impacts.
As the market develops, continued monitoring of the U.S. dollar’s performance and its influence on commodities like cocoa will be relevant. Analysts suggest keeping an eye on macroeconomic indicators that could further shape these trends. Cocoa futures in New York erased earlier gains Monday as traders watch Ivory Coast bean deliveries for clues on this season’s supply outlook.
The most-active contract reversed course after earlier climbing as much as 5.7% on worries that smaller supplies from top grower Ivory Coast will further tighten an already tight market.
Cocoa impacts by stronger dollar
Bean arrivals at Ivorian ports are still ahead of last year — when bad weather hurt harvests — but they have slowed compared to previous weeks.
This has coincided with new concerns about West African supplies as the seasonal dry Harmattan weather intensifies. That poses a risk for the remaining main crop and the upcoming smaller mid-crop harvest. Chocolate boxes and truffles will cost more this Valentine’s Day as confection makers pass on higher cocoa prices to consumers.
The price increase comes after cocoa futures doubled in late 2024, according to an analysis released by ChicksX. This marked the highest price jump for the commodity in half a century, said Al Alof, CEO of ChicksX. “Companies might need to raise the prices of chocolate due to the rise in ingredient prices, of which cocoa is one,” Alof noted.
“Small businesses that use chocolate may be forced to buy ingredients in smaller amounts too, which may see them missing out on bulk purchase savings, further compounding the squeeze.”
Supply issues for cocoa have been driven by bad weather and labor problems in West Africa, where most of the crop is grown. Heavy rain last summer was followed by a drought in the fall, leading to a drop in production. Last Halloween, candy makers such as Hershey reduced their product sizes and diversified their offerings to offset the higher costs of cocoa.
David Branch, sector manager at Wells Fargo’s Agri-Food Institute, predicts that premium chocolate makers will continue to charge more for their luxury items, while companies making more affordable confections will struggle to keep up with demand if the trends continue.