Why 2015’s Best Commodity Could Turn Into This Year’s Nightmare

(Bloomberg) by Isis Almeida – Last year’s best-performing commodity is poised to become the market’s worst nightmare. After the longest rally in London cocoa futures since at least 1989, farmers from Ivory Coast to Peru are preparing to revive supplies in the 2016-17 season that starts in October, creating a surplus that Rabobank International says will be the largest in six years. With demand slowing, the bank is most bearish about prices for the chocolate ingredient this year among the dozen agricultural commodities it tracks. Prices surged 60 percent during a four-year rally through 2015, forcing candy makers from Hershey Co. to Lindt & Spruengli AG to charge more for their products. Last year, El Nino weather patterns left dry conditions that hurt cocoa crops, including in West Africa, which produces about 70 percent of the world’s beans. London futures in December reached 2,332 pounds ($3,423) a metric ton, the most since 2011, when a civil war disrupted exports from Ivory Coast, the top supplier. “We expect these very good international prices to incentivize production,” said Carlos Mera, an analyst at Rabobank in London. “We don’t think these levels are justified given the political stability in West Africa.” Cocoa was

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Source: CTRM Center

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