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Exploring the surge in cocoa prices and its impacts, likening it to the cryptocurrency boom. Strategies chocolate makers use to hedge against fluctuating cocoa prices and secure future cocoa bean costs effectively.
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- Cocoa prices hitting record highs due to supply issues in West Africa driven by extreme weather conditions and financial speculation.
- Chocolate manufacturers using cocoa forward agreements and futures contracts to secure stable cocoa supply and cost.
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Cocoa Prices Skyrocket Due to Supply Shortage and Financial Speculation
Cocoa prices have surged to record highs of $10,000 per ton, primarily driven by supply issues in West Africa, where over half of global cocoa production takes place. Extreme weather conditions caused by El Nino, including heavy rains and droughts, have severely impacted cocoa harvests, leading to the largest supply deficit in over 60 years. Soil fertility decline, lack of tree replanting, and financial speculation by investment funds further contribute to the price increase, with speculative trades in cocoa reaching $8.7 billion.
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Listen to the best highlights from the podcasts you love and dive into the full episode