Cocoa prices surged for a 4th straight year in 2015, closing the year up 10.9 percent at $3,207 per tonne to outperform all other commodities to outweigh demand concerns for chocolate’s main ingredient.
Investors piled into the volatile cocoa market betting on tightening supply from Ghana, where the 2014/15 crop sank to under 750,000 tonnes, down 20% from the prior season due to low farmgate prices, lack of fertilizer distribution, poor weather and crop diseases.
Cocoa was the best performer out of 19 commodities in the Thomson Reuters Core Commodity Index, which sank by almost a 4th in the year as a prolonged rout in oil and base metals deepened amid concerns about waning demand from China, the world’s top consumer of industrial raw materials.
“The big surprise for the first half of 2015 was the decline in Ghanaian production,” said Eric Bergman, a cocoa trader at Connecticut-based brokerage JSG Commodities.
Front-month New York cocoa peaked earlier in December, hitting $3,422 per tonne on Dec. 7, almost a five-year high as hedge funds and other speculative investors increased their bullish bets to the highest in more than a year.
The buying interest came despite lingering concerns about weakening demand, as high prices choked off consumption in the United States and Europe and slowing economies staved off budding sweet tooths in emerging market economies, particularly in Asia.
Cocoa grinds, an indicator of demand, posted year-on-year declines in each of the first three quarters of the year in North America and Asia, with modest gains in Europe in the second and third quarters.
Grinds will likely remain flat in 2016, Bergman said. But the El Nino phenomenon, which brings dry weather to West Africa, and a strong seasonal Harmattan wind in the region have kept prices elevated and could continue to disrupt supply in the new year.