Cocoa Shines Ahead of Valentine?s Day
Today’s Spotlight Market
Cocoa futures continue their march higher, driven by speculation that Valentine?s Day chocolate sales will outside last year. The forecast by the National Confectioners Association is calling for a 1.9 % increase in Valentine?s candy sales to $1.057 billion.? Chocolate makes up roughly three quarters of total sales for the holiday.? ?
Fundamentals
The Valentine?s Day holiday is not the only supportive force driving the Cocoa market.? Overall chocolate sales are expected to reach record levels in 2014 and inclement weather remains a threat to production.? Indonesia has been hit with heavy rains, which is expected to delay the harvest and threaten flowering in the world?s third largest Cocoa producing nation.? Ivory Coast arrivals have been much better than previously expected, rising 16 % over last year from the start of the season.? However, drought conditions in the Ivory Coast could adversely impact the midcrop, lowering both output and quality.? Potential El Nino weather conditions could reduce global output, which is already expected to fall short of demand to the tune of 105,000 tons.? World production tends to be lower in El Nino years.? The weather pattern tends to cause heavy rains and flooding in South America while triggering drought conditions in Southeast Asia and Australia.
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