Agricultural prices have risen on the back of the weak US dollar, with the cocoa price and coffee price both making gains.
Commerzbank Research said the cocoa price in New York made particularly strong gains climbing by 2.4 per cent to a three-month high of US$2,134/ton. The price in London was also trading at a 2½-month high of just shy of £1,500/ton.
However, Commerzbank said the surge in the cocoa price is not attributable solely to exchange rate trends. “It is also benefitting on a fundamental level at present. Demand has proven robust of late, so the global cocoa market is likely to show a significantly lower supply surplus,” it said.
The Arabica coffee price has also risen – at least to some extent – due to the pronounced weakness of US dollar. At 125 US cents per pound, however, it is still trading at a discounted level.
However, Commerzbank said the supply situation is tighter than the low price level would suggest.
“Coffee importers in the US report that supply is becoming increasingly tight in Colombia, the second-largest Arabica producing country,” Commerzbank said. “This is due to high exports in December and a smaller crop in January following too much rain and too little sun. As a result, US stocks of certified coffee from Colombia on the ICE have plunged by a third within the space of a month.”