The cocoa rally shows no signs of slowing, with the London March24 contract up 58% YTD. Meanwhile, the New York contract set a new all-time high in the first half of February, surpassing, in nominal terms, the previous record set in 1977. Since then, prices have moved 20% higher! In this podcast, we discuss the factors contributing to this unprecedented price rally. In our view, recent price action is fundamentally driven by systemic production issues in West Africa that have led to an enormous supply deficit, the third in a row. Current market dynamics are incomparable to prior seasons, thus creating enormous panic among market participants.

Last Friday the USDA released a catalogue of data: the January WASDE, quarterly grain stocks, and Winter Wheat and Canola Seedings. The releases were largely bearish and confirmed the views held in our 2024 outlook (Buyers sail home on rising supplies) of higher-than-expected production and weaker demand. Consumers who have been disciplined are now being rewarded in terms of lower global G&O prices.

Join Rabobank's Agri Commodity Markets Research team for a deep dive into grain and oilseed markets. Since our bearish 2024 outlook was published on November 15, grain and oilseed prices have slid as bargaining power continues to shift from farmers to consumers.

North American 2023 grain harvests are set to outpace demand and pad stockpiles, encouraging funds to take on heavy short positions. The risk premium is now largely in soybeans and South America, where more conducive weather (Brazil) and politics (Argentina) promise to deliver large supplies in 2024 and beyond.