Cocoa is the fundamental commodity for chocolate (NIB) manufacturers like Hershey (HSY), Rocky Mountain Chocolate Factory (RMCF), Tootsie Roll Industries (TR), and Mondelez International (MDLZ). Cocoa futures are traded in the US, which is considered the benchmark for global markets, and in London, which is used as a global benchmark for physical cocoa pricing.
Last week (ended June 16), cocoa front-month futures in the US fell to $1,977 per metric ton from $2,028 per metric ton one week previously (ended June 9). Cocoa prices one year ago stood at $3,169 per metric ton—much higher than current levels.
The cocoa futures market is now in contango, with the futures curve sloping broadly upward, meaning that the current price for US cocoa for different maturities in the future are trading above their current price levels.
Cocoa futures in London closed at 1,606 British pounds per metric ton on June 16, which is a fall from 1,609 pounds per metric ton one week previously. Cocoa futures in London were trading at 2,259 pounds per metric ton one year ago.
The cocoa futures market in London is also in contango, with the futures curve sloping upward.
In the next and final part, we’ll discuss orange juice.