He cocoa and the coffee have been intertwined this year, with the Extreme weather and shortages driving demonstrations of both basic products that test the limits of operators.
Same as him cocoathe market coffee faces serious shortages. And, like the cocoathe production of coffee It is concentrated in two countries. More importantly, many major traders deal in both commodities, so the rising prices of the cocoa are squeezing those players out of the cash market and forcing them out of cash trading. coffee.
The connection is important because it helps explain in part why oil prices coffee skyrocketed and how a cash crisis is blocking investors merchants off the market. The latest impacts of cocoa in it coffee They may end up being limited thanks to their differences from the chocolate-making ingredient.
The trade of coffee could have been “contaminated” by a wave of speculative buyers betting on a rise in prices after the problems in the cocoasaid Carlos Costasales manager of Hedgepoint Global Markets LLC.
The futures of robusta coffee They rose more than 70% in the six months to April, reaching the highest price in more than four decades. The prices of cocoa They have more than doubled this year, reaching a record last month.
The rise of cocoa has had a “psychological effect” in it coffeeprompting comparisons between commodities, said Andrew Acostadirector of the financial firm Marex Group Plc. Both the futures of cocoa as those of the robusta may have attracted “significant margin calls” as they rose, forcing traders to pick up hedges or trade options to protect their positions. Margins for companies that supply both commodities could be “suffering,” he added.
Aggregate open interest, or the number of outstanding contracts, fell both in the cocoa like robust as prices rose, inciting volatility. However, Fundamentally, factors such as the concentration of cocoa production in West Africa make it “much more challenging in the long term than coffee”said Acosta.
The world’s supply of coffee and cocoa It comes from a handful of countries. Vietnam and Brazil They represent more than half of world grain exports. coffeeand Vietnam has suffered a severe drought. The two largest producers of cocoa are Ghana and Ivory Coast in West Africawhere production shortfalls are causing unprecedented volatility and record prices.
“The great concentration of cocoa in only two countries led to the problems we are seeing nowand we can’t let the same thing happen with coffee,” he said Vanúsia Nogueiraexecutive director of the International Coffee Organization. Although the situation of the markets coffee may be less extreme, he said the commodity is “following the same lines” as the cocoa.
While supply concerns are already driving up oil prices coffeemarket watchers say the grain used in breakfast drinks is poised to perform better than cocoa.
The producers of coffee They are replacing old plants with new, more productive plants at a steady pace each year, supporting yields and preventing disease, he said. Thiago Cazariniwho runs a brokerage firm in the coffee belt of Brazil. The incentive for farmers to invest in coffee is “significantly higher” as producers can immediately benefit from the increase in market prices.
That’s a big difference from cocoasince the prices in Ivory Coast and Ghana They are set by governments. Even with the current rise in cocoafarmers receive far less than market levels, and decades of disinvestment have made it difficult for growers to replace aging trees or pay for pesticides and fertilizers that could boost yields.
It is likely that the coffee have better performance than cocoa once the regulation of the European Union aimed at preventing deforestation comes into force at the end of the year. That’s because coffee intake is more global than chocolate.which is concentrated on Europesaid Megan Fisherresearcher in Capital Economics. Europe imports almost 60% of grains cocoa in the world and represents more than three quarters of global chocolate sales.
He cocoa It is also a difficult ingredient to replace while the two grain varieties of coffee –arabic and robust– make substitutions easier. When the prices of robust lower quality increases, companies can create mixes of coffee with cheaper versions of the grain arabic high quality in place. This greater demand for arabic has been reflected in recent market movements, with futures NY earning up to 20% before cutting profits this year even with expectations of surplus supply this year.
Brazilthe largest producer of coffee in the world, has “consistently improved” the production of arabic in recent years, said the analyst Rabobank Guilherme Morya In an interview. The addicts to coffee They can rejoice in the fact that there are grains to turn to, even if they are of different origin, price and variety. However, a market concentration that intensifies with Brazil increasing its share in global shipments of coffee raises concerns.
The inability to diversify supply origins “may end up fundamentally changing the industry model and potentially breaking up trade,” he said. Trishul Mandana of the important merchant of Volcafe coffee. “I think this is what we are witnessing today in the cocoaand the coffee industry has a lot to learn from these events.”
(c) 2024, Bloomberg
