Global Cocoa Prices Decline Amid Changing Harvest Conditions
Cocoa markets experience significant downturns, with December ICE NY cocoa (CCZ24) dropping -252 (-3.41%) and December ICE London cocoa #7 (CAZ24) down -134 (-2.39%).
Market Trends and Harvest Pressures
Cocoa prices are sharply lower today, hitting a two-week low for NY cocoa and a one-and-a-half-week low for London cocoa. This decline is largely due to harvest pressures in the Ivory Coast. Recent government data revealed that farmers from the Ivory Coast shipped 192,804 MT of cocoa to ports from October 1 to October 20, a notable increase of +12.9% from 170,794 MT during the same period last year. As the world’s largest cocoa producer, the Ivory Coast significantly influences global prices.
Currency Impact and Production Estimates
The loss in London cocoa was less pronounced than in NY cocoa, attributed to the British pound (^GBPUSD) hitting a two-month low. The weaker pound increases cocoa prices in sterling. Compounding this situation, Ivory Coast regulatory body Le Conseil Cafe-Cacao elevated the 2024/25 cocoa production estimate by as much as 10%, raising it from a previous forecast of 2.0 MMT to between 2.1 MMT and 2.2 MMT.
Diverse Global Cocoa Demand
Current global cocoa demand presents a mixed picture. The National Confectioners Association announced on Thursday that North American cocoa grindings for Q3 rose by +12% year-over-year to 109,264 MT. In Asia, the Cocoa Association of Asia reported a +2.6% yearly increase, totaling 216,998 MT for the same period. However, European cocoa grindings fell by -3.3% from last year, landing at 354,335 MT.
Declining Cocoa Inventories and Legislative Delays
On the supply side, declining global cocoa stockpiles may support higher prices. ICE-monitored cocoa inventories in US ports have seen a downward trend for 17 months, recently hitting a 15-year low at 1,894,855 bags. Earlier this month, NY cocoa futures reached a four-and-three-quarter-month low following the European Commission’s decision to delay anti-deforestation legislation aimed at reducing forest clearance associated with cocoa imports.
Farming Challenges in Ghana and Production Increases in Cameroon and Nigeria
Support for cocoa prices was also provided by Ghana’s Cocoa Board, which cut its 2024/25 production forecast to 650,000 MT from 700,000 MT due to adverse weather and crop diseases. This year’s cocoa harvest in Ghana dropped to a 23-year low of 425,000 MT. As the second-largest cocoa producer, Ghana’s production is closely watched, especially with the harvest set to begin in October.
Cocoa production increases in Cameroon, the fifth-largest cocoa producer, may weigh on prices. Cameroon’s National Cocoa and Coffee Board reported a +1.2% year-over-year rise in cocoa production for 2023/24, reaching 266,725 MT. Additionally, Nigeria’s cocoa exports surged by +6.8% to 14,984 MT, reinforcing its position as the sixth-largest producer.
Forecasting Global Cocoa Deficits
A positive note comes from the International Cocoa Association (ICCO), which raised its 2023/24 global cocoa deficit estimate to -462,000 MT, up from -439,000 MT in May, marking the most significant deficit in over 60 years. The ICCO also reduced its cocoa production estimate to 4.330 MMT from 4.461 MMT earlier this year and projected a 2023/24 global cocoa stocks/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.
