Abstract
Raid on tropical products. With just a few exceptions, the markets for tropical products have been on an upward trend. Cocoa stands out, with a record price of over €11,000 per tonne on the London market in April 2024. Adjusted for inflation, this is very close to the level reached in 1977. The mystery lies less in the market's runaway success following a poor harvest in Côte d'Ivoire, the world's leading producer and exporter, than in the insensitivity of demand to price. A 'comfort food' product, chocolate is sought after at any price - literally. In market jargon, we say that the price at a given moment must 'destroy' demand - that's its role. At €11,000 a tonne, it hasn't destroyed anything. Buyers shortened their cover rates, drew down stocks and shortened flows, while traders were on the lookout for beans. Robusta coffee, too, had a field day, rising by almost 70%, followed a little later by Arabica, then rubber, tea, and palm oil. There are two common factors underlying this joint movement of tropical product prices towards record highs. Demand is buoyant, much more so than had been anticipated, no doubt because it is now spread across multiple geographies and no longer dependent on a single outlet: emerging economies large and small are a powerful, resilient driving force, adding their strength to that of older economies. The other point in common concerns supply: the surprise here goes in the other direction, and it is the low resilience to climatic hazards and disease that is causing production and export levels to vary far beyond what was previously observed. The meeting of fickle supply and stubborn demand produces, as in some marriages, an explosive result.