Chocolate Should Get Cheaper (ADM)

Cocoa prices spiked earlier this year when Ivory Coast, the world’s largest producer, banned exports in a political dispute. The bean reached a high of more than $3,600/metric ton in February.

Since then, the commodity has fallen to less than $2,100/metric ton as exports from Ivory Coast resumed and the current crop year’s harvest has swelled, leading to an expectation of a surplus of 341,000 metric tons. The price slump is now the longest in 50 years.

Bloomberg cites two brokers who are both looking for a production increase in the current crop year:

Output in Ivory Coast, the world’s top producer, may be 1.43 million tons in the year ending Sept. 30, up 3.2 percent from its prior forecast, Ecobank Transnational Inc. (ETI), based in Lome, Togo, said in a report e-mailed Dec. 6. Global supplies will exceed demand for the second straight year, Marex Spectron Group Ltd., a London-based broker, has said.

The largest cocoa processors in the US are Archer Daniels Midland Co. (NYSE: ADM) and privately held Cargill. Whether the price drop for beans leads to a fall in prices for chocolate products remains to be seen.