Cocoa at record high may boost planting in Brazil

The recent record high in cocoa prices in New York could be a window of opportunity to expand planting in Brazil, according to analysts, although it may concern processors. On Monday (1), contracts maturing in May, which are the most traded in the futures exchange, reached $10,120 per tonne, an all-time high and up 3.62% from the previous session.

For Ricardo Gomes, president of the Southern Bahia Regional Development Agency, cocoa above $10,000 per tonne could boost the conversion of pasture areas into agroforest production systems, going beyond the limits of already producing regions. “It is happening in western Bahia state,” said Mr. Gomes.

He says cocoa could rise even further in the short term. One reason, according to Mr. Gomes, is that trading companies that bought cocoa to sell in the futures market have signaled that they may be unable to fulfill the contracts. “It could reach up to $12,000 per tonne if the consumer market does not revert,” he said.

Even amid record-high prices, demand should not be affected in the medium term, said Adilson Reis, an independent analyst.

“Major chocolate manufacturers have accumulated inventories for 2024 in preparation for anticipated increases in cocoa prices. That allows them to trade without a major impact on the end price, thus ensuring the continuity of demand,” he explains.

The rally of cocoa prices in the futures market is also making it unfeasible to pay premiums for a quality product. “I don’t know of anyone in the world doing that [paying a premium] and going much higher than the price set for commodity cocoa,” said Ricardo Gomes.

The following graph compares cocoa exports in the main Brazilian ports that registered the movement of this product in the first two months of the last three years. The data came from Datamar’s DataLiner platform.

Cocoa Export | 2022 x 2023 x 2024 | TEUs

Source: DataLiner (click here to request a demo)

The price of commodity cocoa in Bahia approached R$800 on Monday (1), a record high. Four months ago, fine cocoa was traded at R$640 per arroba (a metric unit equal to 15 kilos) in the region.

Source: Valor International

Full original text available at: https://valorinternational.globo.com/agribusiness/news/2024/04/02/cocoa-at-record-high-may-boost-planting-in-brazil.ghtml

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