**Cocoa Market Update: July 2023**
On Tuesday, July ICE NY cocoa prices closed unchanged while July ICE London cocoa #7 dropped by 20 points (-0.68%). The decline followed updated weather forecasts predicting drier conditions in West Africa, which initially caused prices to rise due to concerns over recent heavy rains damaging cocoa trees in the Ivory Coast. Last Friday, cocoa inventories reached a 1.75-year high of 2,929,074 bags, contributing to pressure on prices.
Current data indicates that funds increased their short positions in NY cocoa to a total of 21,111, the highest level in over three years. In terms of production, Nigeria’s cocoa exports fell by 20% year-over-year in April, while the Ivory Coast reported a 3% increase in shipments to 1.69 million metric tons for the current marketing year. The U.S. NOAA estimates an 82% chance of developing El Niño conditions that could further impact cocoa production negatively, amidst signs of a potential smaller global surplus.
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