Global Cocoa Prices Decline Amid Mixed Demand Signals and Production Estimates

Ivory Coast Boosts Crop Estimates, Impacting Market

December ICE NY cocoa (CCZ24) fell by -321 points (-4.13%) on Friday, while December ICE London cocoa #7 (CAZ24) dropped -243 points (-4.18%). Cocoa prices fell to a one-week low, influenced by forecasts for a larger crop from the Ivory Coast. The Côte d’Ivoire’s regulatory body Le Conseil Cafe-Cacao revised its cocoa production estimates for 2024/25 upward by approximately 10%, raising it to 2.1 million metric tons (MMT) to 2.2 MMT from an earlier projection of 2.0 MMT.

Demand Figures Present a Mixed Picture

Recent data on global cocoa demand has shown variability. The National Confectioners Association reported that cocoa grindings in North America rose by +12% year-over-year (y/y) to 109,264 MT for the third quarter. In Asia, the Cocoa Association of Asia noted a +2.6% y/y increase in cocoa grindings, totaling 216,998 MT. Contrarily, the European Cocoa Association observed a decline in European cocoa grindings, which fell by -3.3% y/y to 354,335 MT during the same period.

Weather-Driven Production Delays and Quality Concerns

Earlier in the week, cocoa prices in New York reached a two-week high due to heavy rains in West Africa, which caused flooding and hindered farmers’ access to the fields, delaying the harvest. These rains also pose a risk to the quality of the harvested cocoa beans, complicating the drying process.

Shipping Declines Point to Future Price Support

Lower production levels from the Ivory Coast, the largest cocoa producer globally, support bullish sentiments for cocoa prices. According to government data, cocoa shipments from Ivory Coast fell to 100,264 MT from October 1 to October 13, down -12% from the same period last year, when 114,000 MT was shipped.

Stockpiles at Historical Lows Affect Pricing

Decreasing global cocoa inventories are also a positive sign for prices. Stocks monitored by the ICE in U.S. ports have been declining for the past 15 months and recently reached a 15-year low of 1,948,190 bags.

Regulatory Postponements Mix with Production Estimates

Earlier this month, New York cocoa had dipped to a nearly five-month low after the European Commission delayed an anti-deforestation law, originally set to take effect on December 30. This law aimed at limiting deforestation linked to imports like cocoa. The delay allows the use of existing certified cocoa stockpiles in European warehouses, easing the fears of supply limitations.

Shifts in Ghana and Cameroon’s Production Outlook

Cocoa prices found additional support following an August 20 announcement from Ghana’s Cocoa Board (Cocobod), which cut its 2024/25 cocoa production estimate to 650,000 MT from a previous forecast of 700,000 MT due to adverse weather and crop diseases. Ghana, the world’s second-largest cocoa producer, saw its 2023/24 harvest slump to a 23-year low of 425,000 MT.

Regional Production Trends Affect Market Stability

In contrast, Cameroon, the fifth-largest cocoa producer, reported a -1.2% y/y increase in its 2023/24 cocoa production to 266,725 MT as of August 21. Meanwhile, Nigeria’s cocoa exports also saw a boost, climbing +6.8% y/y to 14,984 MT, positioning Nigeria as the sixth-largest cocoa producer.

Global Cocoa Deficit Signals Future Price Pressure

On August 30, the International Cocoa Association (ICCO) raised its estimate for the global cocoa deficit in 2023/24 to -462,000 MT, up from May’s prediction of -439,000 MT, marking the largest deficit in over 60 years. The ICCO also reduced its cocoa production forecast to 4.330 MMT from 4.461 MMT previously, projecting a global cocoa stocks-to-grindings ratio at a 46-year low of 27.4%.

More Cocoa News from Barchart

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. For more information please view the Barchart Disclosure Policy here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.