Cocoa and coffee prices have experienced a significant surge, with cocoa futures recently surpassing the $10,000 per metric ton mark—a first in history. Citi analysts suggest that this upward trend may continue due to poor harvests in West Africa, the world's largest cocoa-producing region, and adverse weather conditions impacting global supplies. Despite a current slight dip in prices, there is potential for further escalation if demand remains high and supply constraints persist. Conversely, a decrease in demand could lead to a substantial price drop. Similarly, coffee prices have soared, driven by a heatwave in Vietnam that has affected robusta production, thereby boosting arabica bean prices. Citi remains cautiously bearish on cocoa through the year-end and more so into 2025 but acknowledges the potential for further short to medium-term rallies in coffee prices.
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