**Cocoa Prices Decline Amid Demand Concerns and Weather Risks**
On Wednesday, cocoa prices fell, with July ICE NY cocoa (CCN26) down 0.88% to close at -36 and July ICE London cocoa #7 (CAN26) down 1.41% to close at -44. Concerns over chocolate demand intensified after Barry Callebaut, the seventh-largest chocolate maker, provided guidance indicating a slower-than-expected recovery in sales volumes. Additionally, cocoa inventories reached a 1.75-year high of 2,913,278 bags, exacerbating downward pressure on prices.
While cocoa prices face challenges from rising inventories and increased shipments from the Ivory Coast, which recorded 1.66 million metric tons shipped (up 1.8% year-over-year), weather concerns may offer some support. The NOAA predicts an 82% chance of an El Niño event developing, which could adversely affect cocoa production in West Africa. Moreover, recent reports revealed a 20% drop in Nigeria’s cocoa exports in April, contributing to a tightening supply situation.
Consumer demand for chocolate remains relatively steady as evidenced by strong earnings from Hershey and Mondelez, despite a 1.3% decrease in North American chocolate candy sales. Nevertheless, the National Confectioners Association reported a 3.8% decline in Q1 cocoa grindings in North America and a 7.8% drop in Europe, underscoring ongoing challenges in the global cocoa market.
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