1. Chocoholics be warned…
The countdown to the Easter bunny’s arrival is on. And you might want to think about buying your chocolate soon! The cocoa price has soared to a fresh record high this week, approaching $7,000 USD/metric tonne.
Climate patterns are partly to blame for rising costs. The El Niño weather pattern led to unseasonably high temperatures and rainfall that ravaged crops in West Africa. But structural factors are also at play. Governments in Ghana and Ivory Coast regulate cocoa markets heavily, and set prices for farmers. The thin margins currently on offer have discouraged new plantation investment and forced farmers to cut back on fertiliser costs. It looks like the cocoa industry is facing a bitter reckoning…
Source: Bloomberg (March 2024)
2. Seeking shareholder returns…
The latest Global Dividend Index by Janus Henderson showed global dividends increased by 5% in 2023, to a record USD $1.66 trillion. 86% of the companies tracked increased dividends or held them steady.
Meanwhile the share of S&P1500 companies repurchasing stock has surged. In 1995, only 3% participated. While in 2023, 70% of companies repurchased stock, and 66% paid a dividend.
Source: FactSet, Goldman Sachs Global Investment Research (March 2024)
3. Tale of two countries…
While retail sales continue to rise in the US (albeit at a declining rate), China has struggled to get back to their pre-Covid trend levels.
Source: US Census Bureau, China NBS, WIND, Macquarie Macro Strateqy (March 2024)