Major agricultural commodities continue to move higher, reflecting the negative impacts caused by adverse weather conditions in several producing countries. However, the cocoa market, which has faced specific challenges, finds itself in a different situation. Although the upward trend affects other commodities, cocoa is facing strong technical resistance, struggling to break through the $8,000 per ton barrier.

Climate Impact and Drop in Ivory Coast Production 

Ivory Coast, the world’s largest cocoa producer, is feeling the effects of unfavorable weather conditions. Local government sources confirmed that, as of September 22, cocoa imports from this harvest were 1.74 million tons, a significant 26% drop compared to the same period last year. This scenario contributes to a tighter supply scenario in the global market, raising concerns about cocoa supplies.

Certified Stocks in Decline 

In addition to the decline in production, certified cocoa stocks on the ICE exchange are also decreasing. This scenario of declining stocks, combined with the lower supply from Ivory Coast, tends to maintain volatility in the market, even if prices encounter resistance to surpass new levels.

ICE Collateral Changes 

On September 20, 2024, the ICE exchange announced a reduction in the collateral value of cocoa futures contracts, from $16,742 to $13,090. The measure is intended to adjust operating costs for investors amid high market volatility, although the effects of this change have not yet been fully felt in trading. 

Future Outlook 

While the global trend is for agricultural commodity prices to rise, driven by shortages caused by weather-related issues, cocoa is facing a battle of its own. Technical resistance to breaking the $8,000 level, coupled with uncertainties related to supply and demand, is creating an atmosphere of caution among investors. Tight stocks and falling production in Ivory Coast will be key factors to watch in the coming weeks as the market tries to find its footing amid uncertainty. 

With the outlook still volatile, the cocoa market is expected to continue to oscillate between limited supply pressure and technical price barriers, with investors keeping an eye on the next moves in weather conditions and regulatory decisions by international exchanges.

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