Coins And Cocoa: Shortages And Excesses -- July 1, 2020

Updates

July 19, 2020: from ZeroHedge, July 19, 2020: cocoa prices hit two-year low as chocolate consumption falters. Tyler says Americans are not in a celebratory mood. Not! This is all about restaurants being shut down. From the linked story:

Swiss chocolate maker Barry Callebaut reported last week a 14.3% decline in last quarter sales as volumes sold to retail clients were halved.

ICE Europe cocoa futures plunged into a bear market in early July with prices down 24% in 22 weeks. The plunge in prices started around the time the pandemic began (late January/early February).

Original Post

Two interesting stories popped up overnight.

First, early in the pandemic, when there was a toilet paper shortage and a rumor there would be a beef / chicken shortage, I noted large bins of Hershey's chocolate syrup in our neighborhood store. I commented on that to my wife, but not sure if I posted it on the blog. I don't thing I did. The amount of Hershey's chocolate syrup was incredible, actually sitting on pallets inside the store. We thought it was due to Hershey's anticipating more stay-at-home sundaes. Well, now we know the rest of the story. Link here.

Cocao futures hit one-year low as pandemic wrecks global consumption.

Cocoa futures are a proxy of economic activity among consumers. Chocolate companies suffered steep declines in sales as lockdowns closed restaurants, resorts, movie theaters, concerts, and other forms of entertainment. Consumers across the world have been crushed by lockdowns, unlikely to spend money at 2019 levels. Days ago, we outlined similar bearish fundamentals playing out in coffee markets, sending spot prices to 15-year lows.

The second story: yesterday at the US Post Office, I asked whether they preferred my two one-dollar bills to pay for postage, or if I could pay them with all the coins I carry with me in a zip lock bag. He sad, in passing, they could use all the coins they could get due to a nationwide coin shortage. I had no idea what he was talking about, and let it go. I pretty much forgot out it until I saw this story. Link here. Apparently, there is a nationwide coin shortage -- I did not now. There's certainly not a coin shortage in our house. We have jars full of coins. From the linked article:

We recently penned a piece on a developing nationwide coin shortage sparked by the virus pandemic. As a result of the shortage, at least one major supermarket chain has removed the ability to pay in cash at self-scan checkout machines.

Meijer Inc., a supermarket chain based in the Midwest, with corporate headquarters in Walker, Michigan, announced last Friday, that self-scan checkout machines at 250 supercenters would only accept credit or debit cards, SNAP and EBT cards, and gift cards.

He said the shortage was due to the mass business closures that prevented people from spending their coins, as well as a lack of places that are open where people can trade coins for paper bills.

Americans Googling "coin shortage" started to erupt in the back half of June and has since hit a record high. Mainly people in Midwest states are searching for the search term.

When we were stationed overseas, decades ago, the base and post exchanges did not use pennies. It was too expensive to ship pennies overseas, so all transactions were rounded up or down. We did just fine without pennies.