Cocoa prices increased on May 17, 2023, with May ICE NY cocoa closing up +55 to $32,350 per metric ton (+1.73%) and May ICE London cocoa #7 rising +34 to $2,390 (+1.44%). The rally was driven by concerns over potential fertilizer shortages in West Africa due to the ongoing closure of the Strait of Hormuz, a vital passage for approximately 30% of the world’s fertilizer supply.
Current cocoa inventories rose to a 7.75-month high of 2,348,743 bags, while farmers in the Ivory Coast and Ghana are expecting improved crop yields due to beneficial rain. Despite short-term price increases, demand remains weak; Barry Callebaut reported a -22% decline in cocoa sales for Q4 2022, influenced by changing consumer preferences amidst high chocolate prices. Additionally, cocoa grindings in Europe fell -8.3% year-over-year, marking the lowest Q4 figures in 12 years.
Looking ahead, projections indicate a reduction in cocoa production in the Ivory Coast by -10.8% for the 2025/26 season, while Nigeria’s production is expected to drop by -11%. The International Cocoa Organization has revised its estimate for a global cocoa surplus in the 2024/25 season to 75,000 metric tons, marking the first surplus in four years.
