March 2016 Cocoa Market Report

As expected, cocoa bean futures drifted higher following a sharp downturn earlier in the month. The lack of significant fundamental developments leaves the market vulnerable to some further upward impetus from the specs for the short term. Medium term outlook would be somewhat bearish as summer approaches and expectations for a strong next crop become relevant.

The cocoa butter ratio remained steady and even higher for forward deliveries although actual coverage has been slowed by the end of peak holiday chocolate production.

Cocoa powder prices remained steady despite the higher market which is not a positive development for the processor. Again, lack of strong demand gives the big buyers some leverage, that is, if there are any big buyers still needing coverage; however, this is tempered by continued tight supply on some specific items for nearby requirements. As always, the powder buyer needs to keep a keen eye on the butter ratio which would seem more likely to decline than increase thus resulting in upward pressure on the cocoa powder price. As such, coverage for 2016 should be in place and consideration given to covering early 2017.