Cocoa Prices: Global market trends continue to influence domestic

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Domestic cocoa prices continued to be influenced by price movements in the international market.

Procurement price of Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd stood in the range of ₹200-230 a kg for wet cocoa beans and ₹700-730 a kg for dry cocoa beans on May 13. On May 6, it offered ₹250-275 a kg for wet cocoa beans and ₹800-850 a kg for dry cocoa beans. It came down to ₹250 a kg (wet cocoa beans) and ₹800-810 a kg (dry cocoa beans) on May 7, and ₹225-250 a kg (wet) and ₹700-770 a kg (dry) on May 8.

Kishore Kumar Kodgi, President of Campco, attributed this to the international market movements and to the domestic developments. July US cocoa futures closed at $8864 a tonne on May 10. In the past week, US cocoa futures had touched a maximum of $9593 a tonne on May 7. London cocoa futures closed at £7517 a tonne on May 10. They started the week at £8005 a tonne on May 7.

Also Read: Indian cocoa prices take cue from global market; Campco procures wet beans at ₹250-275 a kg

Volatility impact

According to the website Trading Economics, cocoa futures surged toward $8,900 a tonne, their highest since April 30, amidst ongoing high volatility in the market and persistent concerns about tight global supplies. Traders were closely monitoring crop conditions in West Africa, the primary region for cocoa cultivation, following poor harvests that have led to the world facing a third consecutive annual deficit, it said.

Kodgi told businessline that the volatility in the international market has been impacting the price of the commodity in the domestic market also. Following the volatility in the international market, some buyers in the domestic market stopped buying from growers last week. This impacted the cocoa price in the domestic market. However, Campco continued buying cocoa stocks from growers and provided stability in the domestic market, he said.

Campco is getting wet cocoa beans from its grower members in Karnataka and Kerala, he said.

Current trend to continue

In their Commodities Feed last week, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist of ING Think, said the volatility is likely to continue due to reduced liquidity and concern over market tightness. Farmers in the key producer, Ivory Coast, have delivered around 1.37 million tonnes (mt) of cocoa to ports so far this season, down from around 1.97 mt over the same period last season, they said.

Cocoa is traded on New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE) in London. The prices in New York are based on the South-Asian market, and prices in London are based on cocoa from Africa.

Also Read: As cocoa prices soar, consumers will need to brace for pricey chocolates