Cocoa Prices Dip as Ivory Coast Boosts Supply

Market Update: Cocoa Prices Reflect Mixed Global Demand and Weather Challenges

March ICE NY cocoa (CCH25) on Monday closed down -113 (-1.24%), while December ICE London cocoa #7 (CAZ24) fell -95 (-1.22%).

Prices for cocoa experienced moderate losses due to a boost in supplies from the Ivory Coast, the leading cocoa producer. According to government data released on Monday, farmers in the Ivory Coast shipped 642,500 MT of cocoa to ports from October 1 to November 24. This figure reflects a significant 34% increase compared to the 415,523 MT shipped during the same period last year.

In the preceding Friday’s session, NY cocoa had reached a 2-1/2 month high, while London cocoa hit a 4-1/4 month high. The sharp rise in cocoa prices had been driven by concerns over heavy rainfall in the Ivory Coast, which raised the mortality rates of cocoa buds on trees.

Adverse weather conditions in West Africa have contributed to fluctuating cocoa prices. The recent heavy rains in Ivory Coast led to flooding, heightened disease risks, and deteriorating crop quality. The cocoa beans harvested recently showed lower quality, averaging around 105 beans per 100 grams. The Ivory Coast cocoa regulator permits exporters to purchase bean counts ranging from 80 to 100 or slightly more per 100 grams, with lower bean counts indicating higher quality cocoa.

Decreasing global cocoa stockpiles are a positive sign for prices. ICE-monitored cocoa inventories in U.S. ports have been declining for the past 1-1/2 years and dropped to a 19-year low on Monday, totaling 1,585,101 bags.

However, increased supplies from the Ivory Coast present a bearish outlook for cocoa prices. The Ivory Coast regulator, Le Conseil Cafe-Cacao, raised its 2024/25 production estimate to between 2.1-2.2 MMT on October 18, up from a previous forecast of 2.0 MMT made in June.

Global cocoa demand news has been mixed. The National Confectioners Association reported on October 17 that North American cocoa grindings rose by 12% year-over-year in Q3, totaling 109,264 MT. Furthermore, the Cocoa Association of Asia noted a 2.6% increase in Q3 cocoa grinding, reaching 216,998 MT. Conversely, the European Cocoa Association reported a 3.3% decline in European Q3 grindings, bringing the total to 354,335 MT.

Encouraging support for cocoa prices came when Ghana’s Cocoa Board (Cocobod) revised its 2024/25 production estimate down to 650,000 MT from a prior forecast of 700,000 MT on August 20. Ghana’s cocoa harvest for 2023/24 fell to a 23-year low of 425,000 MT due to poor weather and crop diseases. As the second-largest cocoa producer, Ghana’s 2024/25 harvest is set to start this October.

A bullish sign for the market was presented by the International Cocoa Association (ICCO) on August 30, which revised its estimate for the global cocoa deficit in 2023/24 to -462,000 MT, up from -439,000 MT in May. This marks the largest deficit the cocoa market has seen in over 60 years, alongside a reduction in the 2023/24 production estimate to 4.330 MMT from 4.461 MMT. The ICCO also forecasted a stocks-to-grindings ratio for 2023/24 at a 46-year low of 27.4%.

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 those of the author and do not necessarily reflect the views of Nasdaq, Inc.