Cocoa prices reached three-week highs on June 14, 2023, with July ICE NY cocoa closing up by $2 (+0.05%) at $3,919 and July ICE London cocoa up by $5 (+0.16%) at $3,148. The rise in prices is largely attributed to confirmed weather risks associated with the El Niño pattern, which could lead to decreased cocoa yields in West Africa. Additionally, the U.S. National Oceanic and Atmospheric Administration predicts a 67% chance of a “Super El Niño” occurring this year.
The cocoa market also faces downward pressure from rising inventories, with ICE cocoa stocks at 2,918,736 bags, near a 1.75-year high. The Ivory Coast reported an 18.9% increase in cocoa shipments to 1.95 million metric tons compared to the same period last year. Conversely, there are concerns about weaker global demand; North American cocoa grindings fell 3.8% year-over-year in Q1 2023, while European grindings dropped 7.8%, the lowest in 17 years.
Nigeria’s cocoa exports also showed a decrease, with April shipments down 20% year-over-year. In light of these dynamics, the global cocoa surplus is projected to decrease, with StoneX estimating a surplus of only 149,000 metric tons for the 2026/27 season, down from earlier projections of 267,000 metric tons.
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