Commodity Roundup: Cocoa futures extend rally on supply concerns; CPI print in focus

Cocoa futures jumped on Tuesday, extending their previous session’s rally due to ongoing supply concerns in top growing regions. Cocoa futures (CC1:COM) in New York have advanced about 75% YTD, and gained 14% so far in March. Prices were up +0.23% at 6,743.50 by 6 am ET.

Lower cocoa production in the Ivory Coast, the world’s largest producer, is a major bullish factor for cocoa prices, as per a Barchart.com report. “Monday’s government data showed Ivory Coast farmers shipped 1.22 MMT of cocoa to ports from October 1 to March 10, down -29% from the same time last year. The Ivory Coast cocoa regulator said last Thursday it expects the Ivory Coast mid-crop, which officially starts in April and is the smaller of two annual harvests, to fall -33% to 400,000 MT from 600,000 MT last year,” the report added.

The cocoa market was the strongest performing commodity of 2023, with London cocoa finishing 2023 up 70%, while US cocoa futures rallied a little more than 61% last year.

Chocolate makers Hershey (HSY) and Mondelez (MDLZ) recently said they are planning more price hikes, after cocoa prices surged over the past year, hitting a series of record highs, due to shrinking supplies.

Elsewhere, in the metals complex, iron ore prices (SCO:COM) were trading lower, after hitting their lowest in more than four months, weighed by persistently weak fundamentals in top consumer China, while prices of most base metals were under pressure ahead of the CPI data.

J.P. Morgan Commodities Research meanwhile reported, the estimated value of open interest across global commodity markets increased by 4% over the week (~$49 billion) to $1.25 trillion, the highest in four months, as of March 8. Base metals estimated open interest also increased by +7% week-over-week, while energy was the only major sector lower on the week, albeit modestly so.

“Driven by precious metals again, global commodity markets registered the highest weekly inflows since January 2023 (calculated across all trader types), totalling $41.8 billion,” JPM analysts noted.

Spot gold (XAUUSD:CUR) was trading -0.3% lower at $2,176.89 an ounce by 6 am ET, as markets awaited the release of U.S. CPI data later in the day, that could influence the Federal Reserve’s policy path. A hotter-than-expected reading would push back the timeline for when the central bank starts its easing cycle. Low interest rates tend to help bullion, as they reduce the opportunity cost of holding the zero-yielding asset.

“A mixed tone prevailed across commodity sectors ahead of US inflation data. China’s economic growth concerns weighed on bulks, while supply concerns supported industrial metals,” ANZ analysts said.

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