Aegon AM: Temper Easter eggspectations as cocoa price soars

March 27, 2024

Aegon Asset Management’s multi-asset manager Robert-Jan van der Mark suggests we need to temper our Easter eggspectations this year as cocoa prices have hit all-time highs, impacting the price of our favourite Easter treat.

Cocoa production is concentrated in West Africa, which collectively supplies around two thirds of the world’s cocoa crop, with Ivory Coast and Ghana leading world production’ says Van der Mark. 

He explains that the region has been hit by crop disease and adverse weather conditions over recent months, with the situation exacerbated in the last few weeks by production issues, causing production estimates to fall and prices soaring.

To make matters worse van der Mark says: 'Investment banks have flagged that the Ivory Coast oversold its main crop, which is harvested between October and January, with production coming in much lower than estimated, This in turn has resulted in some future traders and trade houses being left with short positions (which was supposed to hedge the forward purchase) but with no cocoa delivered, triggering a short squeeze.'

The good news according to the multi-asset manager is that future markets indicate the adverse positioning is near exhaustion and on top of that, the weather forecast is showing rain should be coming to the region, which should give some relief to prices in the near future.

His conclusion: 'Maybe postpone that Easter egg hunt to later in the year!'