March ICE NY cocoa (CCH26) on Wednesday closed up +2 (+0.03%). March ICE London cocoa #7 (CAH26) closed up +11 (+0.25%).
Cocoa prices settled slightly higher on Wednesday, consolidating below Monday’s 2-week highs. London cocoa posted bigger gains on Wednesday after the British pound (^GBPUSD) fell to a 1-week low, boosting cocoa priced in sterling.
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On Monday, cocoa prices rose to 2-week highs as slower cocoa arrivals at ports in the Ivory Coast have fueled concerns about tighter supplies. Farmers in the Ivory Coast delivered 59,708 MT of cocoa to ports during the week ended Dec 28, down -27% compared with the same week last year. Also, cumulative data shows Ivory Coast farmers shipped 1.029 MMT of cocoa to ports this new marketing year (Oct 1 through Dec 28), down -2.0% from 1.050 MMT in the same period a year ago. The Ivory Coast is the world’s largest cocoa producer.
Cocoa prices have underlying support from expectations for index-related buying tied to the addition of cocoa futures to the Bloomberg Commodity Index (BCOM) starting in January. According to Citigroup, the inclusion of cocoa in the BCOM may lure as much as $2 billion of buying of NY cocoa futures.
Cocoa prices also have support after ICE-monitored cocoa inventories held in US ports fell to a 9.5-month low of 1,626,105 bags last Friday.
Cocoa prices have recently been undercut by favorable weather in West Africa. Cocoa farmers in the Ivory Coast have reported that a mix of rain and sunshine is helping cocoa trees bloom, and farmers in Ghana said rains have been regular and helpful to cocoa tree and pod development ahead of the harmattan season.
Chocolate maker Mondelez recently said that the latest cocoa pod count in West Africa is 7% above the five-year average and “materially higher” than last year’s crop. Harvest of the Ivory Coast’s main crop has begun, and farmers are optimistic about its quality.
Cocoa prices have support on a tightening global supply outlook. On Nov 28, the International Cocoa Organization (ICCO) cut its global 2024/25 cocoa surplus estimate to 49,000 MT from a previous estimate of 142,000 MT. It also lowered its global cocoa production estimate for 2024/25 to 4.69 MMT from 4.84 MMT previously. In addition, Rabobank last Tuesday cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.
Cocoa prices were undercut after the European Parliament on Nov 26 approved a 1-year delay to the deforestation law, keeping cocoa supplies ample. The EU regulation, known as EUDR, aims to tackle deforestation in countries whose imports into the EU include key commodities such as soybeans and cocoa. The delay of the EUDR will allow EU countries to continue importing agricultural products from regions in Africa, Indonesia, and South America where deforestation is occurring.
Weak global cocoa demand is bearish for prices. The Cocoa Association of Asia on Oct 17 reported that Q3 Asia cocoa grindings fell by -17% y/y to 183,413, the smallest grindings for a Q3 in 9 years. The European Cocoa Association on Oct 16 reported that Q3 European cocoa grindings fell -4.8% y/y to 337,353 MT, the lowest for a third quarter in 10 years. The National Confectioners Association reported that Q3 North American cocoa grindings rose +3.2% y/y to 112,784 MT, but the addition of new reporting companies skewed the data.
A supportive factor for cocoa is lower cocoa production in Nigeria, the world’s fifth-largest cocoa producer. Nigeria’s Cocoa Association projects that Nigeria’s 2025/26 cocoa production will fall by -11% y/y to 305,000 MT from a projected 344,000 MT for the 2024/25 crop year. In related news, Nigeria reported that its September cocoa exports were unchanged y/y at 14,511 MT.
On May 30, the International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 MT, the largest deficit in over 60 years. ICCO said 2023/24 cocoa production fell by -12.9% y/y to 4.368 MMT. ICCO on Dec 19 estimated a 2024/25 global cocoa surplus of 49,000 MT, marking the first surplus in four years. ICCO also said global cocoa production in 2024/25 rose by +7.4% y/y to 4.69 MMT.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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