According to an article from Investing.com, analysts at Citi have forecasted bullish momentum for cocoa prices in the short term. In their recent note to clients, they highlighted positive market dynamics and risk skew, signaling optimism for cocoa investors.

The investment bank pointed out that terminal prices surged to new contract highs near $10,500/t on ICE (N4 basis) last Friday, indicating a strong upward trend in cocoa prices. This surge in prices is attributed to the anticipation of the first-quarter grindings reports, expected to be released later this month, which are anticipated to provide further insights into demand trends.

Responding to this positive outlook, Citi has revised its 0-3 month point NY cocoa price target from $10,000/t to $12,500/t, reflecting their confidence in the short-term price appreciation. However, analysts remain cautious about the longer-term outlook for cocoa prices, with expectations that prices may peak in the second quarter and potentially enter a bear market by early 2025.

“While our base case suggests that prices will generally peak in the second quarter and could enter a bear market by early 2025, we remain watchful for any developments that could alter this trajectory,” noted the analysts. They emphasized the importance of monitoring supply-demand fundamentals and market developments for informed investment decisions.

Accordingly, Citi analysts anticipate bullish momentum for cocoa prices in the near term, driven by favorable market conditions and strong demand. However, investors are advised to exercise caution and stay informed about evolving market dynamics to navigate potential shifts in the cocoa market landscape.