Cocoa prices have soared amid signs of tighter supplies in Ivory Coast, the world's top grower, raising prospects that chocolate costs will climb.
July futures jumped as much as 6.8 per cent, the most ever for the contract. Farmers in West Africa are already locking in more forward sales for next year's crop than traders were expecting, a sign that supplies from the current harvest are beginning to ebb.
![Farmers in West Africa are already locking in more forward sales for next year's crop than traders were expecting.](http://web.archive.org./web/20170708012035im_/https://www.fairfaxstatic.com.au/content/dam/images/g/w/i/8/7/f/image.related.articleLeadwide.620x349.gwgtpr.png/1496296996047.jpg)
The outlook for tighter supplies marks a shift for the market that's been suffering from a global surplus. The overhang pushed prices down 32 per cent over the past 12 months, helping to lower some retail costs for chocolate.
The treats may not stay cheap for long, or at least that's what hedge funds are signalling.
Money managers have backed away from their bearish cocoa bets for three straight weeks, US government data show.
On ICE Futures US, cocoa for July delivery added 6.6 per cent to settle at $US2037 a metric ton on Tuesday in New York. Aggregate trading was about 70 per cent higher than the 100-day average for the time of day, data compiled by Bloomberg show. Prices are rebounding after reaching their lowest levels in almost 10 years in April.
Ivory Coast growers have sold 950,000 tons of cocoa beans from the 2017-18 main crop as of May 27, according to a person familiar with the matter. The main crop, which starts on October 1, is the larger of the country's two annual harvests.
"That's a pretty big upfront sale, and it's probably the reason why prices are rallying," Jack Scoville, vice president for Price Futures Group in Chicago, said in a telephone interview.
Some growing regions in Ivory Coast and Ghana, the second-largest producer, have been dry and need moisture to aid early crop growth, according to Maryland-based MDA Weather Services. Trees are also stressed from a lack of moisture in Indonesia's Sulawesi region.
Bloomberg