Cocoa futures fell to the lowest in more than four months as traders weigh improved supply in the next season against the prospects of weaker demand.
A farmer arranges cocoa beans to dry at a farm in Kwabeng, Ghana. --
The most-active contract fell 4.4 per cent to US$6,650 a ton in New York, the lowest since early March. With cocoa prices poised to stay above historical averages, demand will likely decrease resulting in a slowdown in grindings, according to analysts at Fitch Solutions’ BMI unit. Chocolate companies have already warned margins could come under pressure in the second half of the year as they purchase beans at higher prices following this year’s rally.
Kitkat maker Nestle SA flagged a “tough consumer environment,” in an earnings call last week, as customers seek cheaper goods. Lindt & Spruengli AG said the global chocolate market was seeing a slowdown for some products. That comes against a backdrop of an improving outlook for the next season which is also weighing on prices. Most analysts see the market flipping to a surplus in the upcoming 2024-25 season after three consecutive years of deficit.
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