Cocoa prices have crossed $10k.
The primary reason for the jump in price is due to
- Illegal gold mining (leads to deforestation)
- Black pod decease (impacts the yield)
- Swollen Stem decease (this kills the plant. it takes 3 years for the plant to start yielding crop)
More and more farmers are moving away from Cocoa Plantation because the govt. procures the crop at a fixed price. For eg. In Ivory Coast the current procurement price is $2500 vs the spot price of $10k. The prices are not remunerative for the farmers they are asking for a price of $4000.
Manorama use to sell CBE at a 40% discount to Cocoa Butter (this is an estimate)
Cocoa butter prices have shot up from $6K to $30k. The yearly supply CBE price will also be negotiated higher (im expecting the CBE prices should go up to $5-6k. from the current $3.5K). I dont think that the CBE prices will shoot up to the same extent. Even if the prices move up from 3.5k to 5k that is more than 40% higher price realisation.
Company is in middle of a huge capex should be completed soon.
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