Cocoa breaks records — how price growth outpaced bitcoin
In 2024, cocoa is likely to become the fastest-growing commodity, outperforming the US stock market and bitcoin. Prices for the main ingredient in chocolate have more than doubled in a year and reached a record high this month.
This is reported by MarketWatch.
How cocoa prices have changed on the market
On Friday, December 20, cocoa for March delivery settled at $11,954 per metric ton, up almost 185% since the beginning of the year. For comparison, on the same day, bitcoin rose by almost 128% and the S&P 500 index by 25%, making this year a rather pale one for it.
The situation with cocoa has not changed significantly since the beginning of the year, as unfavorable weather in Côte d'Ivoire, the main producing region in West Africa, remains a key factor.
As long as weather conditions remain problematic, investments in the soft commodities sector, including cocoa, are expected to increase.
Preliminary data on Friday indicate that other "soft" commodities — those that are grown rather than mined — will show the largest gains in 2024. In particular, we are talking about futures prices for frozen concentrated orange juice.
How climate has affected crops
Record warm oceans in the world have worsened the already precarious situation with cocoa harvests in West Africa. These regions have been hit by two years of extreme weather conditions.
At the beginning of the year, there was a drop in cocoa prices from the April high to the October low. Experts attribute this to seasonality, as harvesting usually begins in October. When offers for the 2024 harvest began to arrive, the market faced the reality of a smaller harvest, which led to new price highs this month.
La Niña and the outlook
The weather usually becomes more favorable for the cocoa harvest during the La Niña phenomenon, a periodic cooling of the ocean surface below the climate norm in equatorial regions. The US National Oceanic and Atmospheric Administration said in mid-December that La Niña conditions are likely to form from November 2024 to January 2025.
On December 18, prices reached a historic intraday high of $12,931.
However, some believe that a collapse is possible after the sharp rise in prices. However, weather problems in West Africa and seasonal trends may continue to drive up prices. During the pre-holiday period, when demand for chocolate increases, cocoa prices usually rise as well.
Experts say that by 2030, the value of one bitcoin could rise to $1 million. This may be facilitated by the policies of US President-elect Donald Trump.
We also wrote that in the last five trading days of the year, the market is experiencing a Santa Claus rally. It can raise the value of most digital assets to historical highs.