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Commodity and Currency Reports


Cocoa Market
At the end of January the market had reached 24 year highs being over the 2000 level. During February, the market eased back and dropped down to 1660 towards the end of the month however since then it has moved within a range of £100 between 1700-1800. So there is still a large amount of volatility, with speculators active and fundamentals still showing negatives, with arrivals at port in Ivory Coast being some 19% behind last year. An overall crop deficit for 2008/2009 is forecast at some 107,000t (last year there was 65,000t shortfall, with a 304,000t shortfall from the year before) and therefore the market is likely to remain high.
So to repeat from last month's Newsletter, that whatever happens, it is unlikely that cocoa prices will drop back to the low 1000's. We would recommend anyone who buys multi tonnes for manufacturing to consider contracting some forward volume when dips occur.

During February, less volatility was seen with Sterling steadying to within a relatively narrow range. We anticipate this continuing forward over the coming weeks, although it really seems to be anybody's guess! The more optimistic amongst our team has wagered that Sterling will hit Euro1.28 versus the Pound by the end of March which is likely to cost him a few beers as barring a minor miracle this is unlikely for the foreseeable future!
Again to repeat the mantra, the weakness of sterling is positive for anyone exporting or fighting against imported finished products. Many importers are looking for UK manufacturers to produce products they have been importing up to now. More and more news items are appearing in the media about people spending their holidays in the UK, as well as an expected influx of tourists from North America & Europe.

Doom and gloom prevails, with the Financial Institutions reporting losses in numbers that are unimaginable. Similarly the High Street businesses continue to suffer, supermarkets, fast food outlets and charity shops bucking the trend. Largely this would probably have happened anyway with the growth in on-line shopping representing a fundamental change. Stock Markets worldwide are ever downwards and major "old industry" companies are wobbling badly. But on the upside, the Food Industry is generally fairly recession proof, vulnerable sectors are in Ready Meals & Processed Foods generally.

Tony Mycock 04.02.09

UK: Cocoa prices ease but upward trend remains

3 March 2009 | Source:

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Cocoa prices have dropped from the 24-year high reached last month but a leading industry expert has warned that manufacturers should brace themselves for a continued upward trend.

Cocoa prices on London's LIFFE futures exchange dropped to GBP1679.67 per tonne yesterday (2 March). In February, cocoa prices had reached a high of GBP2045.

Speaking to just-food, a spokesperson for the International Cocoa Organisation (ICCO) said that while prices may have eased, the factors driving increased cocoa costs are expected to remain in the "foreseeable future".

"We still see a shortage of supply propelling cocoa prices," the spokesperson said.

In response, chocolate makers have moved to protect their margins by reformulating recipes, reducing the size of products and increasing prices.

"While in the short term this will provide a cushion, there is a worry that it could also have a detrimental impact on demand. Already we have seen demand weaken in Asian markets. It is possible that this could spread to established markets in Europe and America," the spokesperson added.


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Uckfield East Sussex. TN22 1QL.
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