Chances of higher costs increase as cocoa futures reach their three-year high. September futures are up $56 or 1.7 percent, at $3,185, while prices have reached $3204, the highest since July 2011, reports Reuters.
According to Bloomberg, heavy showers have prompted fears that harvests won't meet rising demands, for approximately 200 percent of the average monthly rain fell throughout the past few weeks over the Ivory Coast and Ghana, the world's leading cocoa providers. Gaithersburg, a Maryland-based MDA Weather Services, reports that the excessive rainfall increases the risk of disease while reducing crop quality.
The global demand for cocoa products and confections as a whole have doubled over the past 20 years, leaving farmers struggling to keep up. As a result, prices have jumped 18 percent this year, especially due to the rise in chocolate consumption throughout Asia and North America.
Hector Galvan, a senior commodity broker at RJO Futures in Chicago, said in an e-mail today, "Prices are on a tear higher the last few days, likely due to the fears of heavy rains damaging the cocoa yields in West Africa. Moreover, the idea of increasing demand continues to give investors reason to believe that higher prices can be justified," according to Bloomberg.
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