Cocoa, Coffee Reach New Highs on Fear of Aging Trees

Cocoa and coffee futures have reached new highs due to concerns of extreme weather, aging trees in Africa cocoa crops, and declining coffee production in Vietnam. New York cocoa futures rose to the highest level in data since the 1960s, driven by declining production in top-growers Ivory Coast and Ghana. The dryness in Vietnam is expected to drive a deficit in robusta markets for the season starting in October, while dry weather and disease spread are causing a massive shortage for cocoa. Robusta coffee settled at a new high in London due to concerns that poorer output in top-producer Vietnam will fuel bean shortages. Futures for robusta, the cheaper coffee type used in instant drinks, rose 1.6% to the highest in data going back to 2008. The coffee market has been supported as hedge funds exit the cocoa market, where big shortfalls have sent prices soaring, and pile into coffee. Aggregate open interest for cocoa New York futures hit the lowest since 2011.

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