Cocoa futures at the mercy of the dollar
Cocoa futures have been at the mercy of the US dollar recently and have risen and fallen this week as the dollar reacted to US domestic economic news. The dollar-related moves are playing out against a wider backdrop of a tighter cocoa market however.
A better-than-expected US inflation report earlier this week caused the dollar to drop sharply, subsequently boosting cocoa prices. However, by the end of the week the dollar’s decline softened and cocoa prices notched lower, as did many other commodities.
Tighter global cocoa supplies versus high inflation – which will win out?
In its latest Cocoa Market Report the International Cocoa Organization said that the cocoa market remains in a supply deficit for the ongoing 2021/22 season, but that issues such as inflation and currency strength are bringing in an element of uncertainty over future demand in the large cocoa and chocolate consuming regions, namely Europe, the US and China.