Commodities have been controlled by the Evergrande debt situation the past week or so – adding to an already volatile market. Each commodity has been affected by this situation in its own way. Cocoa has pulled back due macro uncertainty from China. Asian demand has a big affect on cocoa this time of year. As we head into the final quarter, cocoa demand has slowed in recent years. The slowdown during Q4 has mainly been due to the pandemic, there has been less chocolate consumption due to shutdowns and slowdowns.
A few key things to watch – N. American and European demand and weather in West Africa. If production and supplies continue to look like an issue, cocoa prices could end the year around 2800. The next few weeks should be telling, we’ll get more information about the current state of the global economy and see how Covid numbers look as vaccine rollouts continue and people try to continue to the new normal.