Cocoa
Rise in demand for chocolates in the emerging markets is pegged at 10% annually and is expected to continue for the next five years. However, supplies of cocoa beans, the key-ingredient in chocolate, have been stagnant. The growing deficit have fueled cocoa prices on the futures market in New York to 29-month highs and have also increased prices of candy. It is felt that farmers need to increase cocoa production by about one million metric tons, or about 25% of current output, by 2020 to avoid a shortage. To combat the supply shortage, Candy makers including Mars, maker of M&M’s and Twix, and Nestlé SA, maker of the Kit Kat and Crunch bars, have poured millions of dollars into research and development of new, high-yielding cocoa varieties. They are also expanding outreach programs to train growers. This is perhaps the greatest challenge to the chocolate industry’s efforts to boost production.
Wheat
With hot, dry weather and the threat of a dry El Nino weather pattern developing, the supply picture from Australia, the world’s second largest exporter is uncertain. Analysts are expecting an estimate of around 25 million tonnes, which if realised would be the country’s fifth largest crop. While global wheat prices hit multi-year lows, a record low in Australian beef prices and weaker canola futures are incentives for growers to maintain wheat acreage.
Sugar
Sugar shipments from Thailand, the second-biggest exporter, will surge 22% to a record this year as output expands to an all-time high. Exports will climb to 9 million tonnes this crop year, beating the 8.5 million tonnes estimated in December and last year’s 7.4 million tonnes, reports say. Output of sugar from the cane harvest now in progress will be as much as 11.5 million tonnes, more than 11 million tonnes estimated in December. Indonesia and China are the region’s largest buyers. The sugar cane crop in Brazil will decline in the 2014-15 season that starts in April 2014, according to researcher Datagro Ltd. Sugar prices have begun to soar as a drought in Brazil fueled concerns about smaller crops from the world’s biggest exporter. January and February have been the driest months in Brazil in 30 years, according to a São Paulo-based private weather service.