Softs Monitor July: London cocoa prices in grip of Brexit

by: Frank Rijkers

A positive result…

Now that we are halfway through 2016, it is time for a mid-year review. Looking at the prices of cocoa, coffee and sugar, the general conclusion is that the first six months of the year produced a positive result. Since the start of 2016, sugar (#11) has been the strongest performer within the agri commodities complex, with prices soaring no less than 38%. Prices for coffee are also on the rise. Arabica, which makes up the bulk of the world’s coffee, jumped 16% while Robusta advanced 14% over the same period. The picture for cocoa is more mixed. Prices in New York edged 1% lower, but gained a strong 7% in London. The difference mainly arose recently due to sharp currency fluctuations triggered by the Brexit referendum.

…with “old” times reviving…

The sharp price upswings in the first half of the year have put the market in an upbeat mood. The recent price spike has restored sugar to the price level last witnessed at the start of 2013. This seems to signal that the previously described turnaround has now definitely materialised. Coffee, too, has been fetching prices not seen for a long time. The price of coffee is currently at its highest level in almost 1.5 years. Cocoa, as noted, presents a more mixed picture. The New York prices are currently below the average of the past months, but in London the current positions are causing a veritable landslide, resulting in the highest price since 1977.

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