Cocoa Prices Dip Amid Mixed Production Reports
December ICE NY cocoa (CCZ24) fell by -236 (-3.21%), while December ICE London cocoa #7 (CAZ24) decreased by -11 (-0.19%).
Stronger Dollar Impacts Cocoa Pricing
Cocoa prices gave up earlier gains and fell today, influenced by a rising dollar (DXY00). However, losses in London cocoa were moderated by a weakened British pound (^GBPUSD), which makes cocoa priced in sterling relatively cheaper.
Ivory Coast Harvest Growth
The cocoa market faced pressure earlier this week due to reports of a faster cocoa harvest in the Ivory Coast. According to government figures released Monday, Ivory Coast farmers shipped 365,072 MT of cocoa to ports from October 1 to November 3, marking a 26% increase compared to 288,686 MT during the same period last year. The Ivory Coast remains the largest cocoa producer globally.
Insights from Barry Callebaut
Support for cocoa prices also came from remarks made by the CEO of Barry Callebaut, one of the largest chocolate producers in the world. He noted that although cocoa crops in West Africa show “significant improvement” compared to last year, they have not yet reached the levels observed during the 2022/23 season.
Declining Cocoa Stockpiles Boost Prices
Another bullish factor for cocoa prices is the decreasing global stockpiles. ICE-monitored cocoa inventories in US ports have continued to trend downward for 17 months, hitting a 19-year low of 1,718,356 bags on Thursday.
Production Estimates Raise Caution
The situation was complicated when the Ivory Coast regulator, Le Conseil Cafe-Cacao, raised its 2024/25 cocoa production estimate to a range of 2.1-2.2 MMT, up from a previous forecast of 2.0 MMT in June.
Mixed Global Demand Outlook
Global demand for cocoa brought mixed news recently. The National Confectioners Association reported a 12% year-over-year increase in North American Q3 cocoa grindings, totaling 109,264 MT. The Cocoa Association of Asia also announced a 2.6% year-on-year rise in Asian cocoa grinding, reaching 216,998 MT. In contrast, the European Cocoa Association noted a decline in Q3 cocoa grindings, which fell by 3.3% year-over-year to 354,335 MT.
Ghana’s Production Cut
Support for cocoa prices emerged after Ghana’s Cocoa Board (Cocobod) lowered its 2024/25 cocoa production estimate to 650,000 MT from an earlier forecast of 700,000 MT due to adverse weather and crop disease. Ghana’s 2023/24 cocoa harvest reached a 23-year low of 425,000 MT, starting its new harvest cycle this October. As the second-largest cocoa producer, Ghana’s output is closely watched by the market.
Cameroon and Nigeria’s Growing Production
Cocoa production in Cameroon, the fifth-largest cocoa producer, is challenging for pricing. The National Cocoa and Coffee Board reported that cocoa production in Cameroon rose by 1.2% year-over-year to 266,725 MT for the 2023/24 season. Additionally, Nigeria’s cocoa exports increased by 6.8% year-over-year to 14,984 MT, with Nigeria ranking as the sixth-largest cocoa producer.
Global Cocoa Deficit Prediction
In a bullish twist, the International Cocoa Association (ICCO) raised its global cocoa deficit estimate for 2023/24 to 462,000 MT, an increase from May’s projection of 439,000 MT. This marks the most substantial deficit seen in over 60 years. The ICCO also revised its 2023/24 cocoa production estimate down to 4.330 MMT from 4.461 MMT previously, alongside forecasting the lowest stocks/grindings ratio in 46 years at 27.4%.
More Cocoa News from Barchart
On the date of publication, Rich Asplund did not hold positions directly or indirectly in any of the securities mentioned in this article. All information in this article is for informational purposes only. For further details, please refer to the Barchart Disclosure Policy here.
The views expressed here are those of the author and do not necessarily represent those of Nasdaq, Inc.
