Cocoa Prices Rise Modestly Amid Supply and Demand Dynamics
Cocoa Futures Experience a Small Rebound Following Recent Struggles
December ICE NY cocoa (CCZ24) Friday closed up +14 (+0.21%), and December ICE London cocoa #7 (CAZ24) closed up +57 (+1.10%).
On Friday, cocoa prices managed to recover from earlier losses, ending with slight gains. This uptick stemmed from oversold conditions that prompted some technical short covering in cocoa futures. Cocoa prices faced significant declines over the past week, reaching an 8-month low in New York and marking a 3-week low in London. Notably, harvest pressures in the Ivory Coast, the world’s largest cocoa producer, are contributing to these downward trends. Recent government data revealed that from October 1 to October 20, farmers in the Ivory Coast shipped 192,804 MT of cocoa to ports, which is a 12.9% increase compared to 170,794 MT during the same period last year.
Additional downward pressure came from an announcement last Friday by Ivory Coast’s regulator, Le Conseil Cafe-Cacao, which raised its production estimate for 2024/25 to between 2.1 MMT and 2.2 MMT, up from an earlier forecast of 2.0 MMT made in June.
The latest reports on cocoa demand present a mixed picture. According to the National Confectioners Association, North American Q3 cocoa grindings rose by 12% year-over-year to 109,264 MT. In Asia, the Cocoa Association of Asia noted a 2.6% year-over-year increase in Q3 grindings, reaching 216,998 MT. Conversely, the European Cocoa Association reported a 3.3% decline in Q3 grindings, which totaled 354,335 MT.
Another factor supporting cocoa prices is the declining global stockpiles. Cocoa inventories monitored by ICE at US ports have been decreasing for the past 17 months, recently hitting a 19-year low of 1,820,736 bags.
Support for cocoa prices has also come from Ghana’s Cocoa Board (Cocobod), which on August 20 lowered its 2024/25 cocoa production estimate to 650,000 MT from a previous forecast of 700,000 MT. Bad weather and crop diseases contributed to a steep drop in Ghana’s cocoa harvest, which fell to a 23-year low of 425,000 MT in 2023/24. As the second-largest cocoa producer globally, Ghana’s new harvest cycle begins in October.
In contrast, Cameroon, the fifth-largest cocoa producer, is projected to increase its production. Cameroon’s National Cocoa and Coffee Board reported a 1.2% year-over-year increase in its 2023/24 cocoa production, totaling 266,725 MT. Additionally, Nigeria, the sixth-largest producer, observed a 6.8% rise in August cocoa exports, reaching 14,984 MT.
In a notable bullish sign, the International Cocoa Association (ICCO) revised its global cocoa deficit estimate for 2023/24 to -462,000 MT, up from May’s estimate of -439,000 MT. This represents the largest deficit seen in over 60 years. ICCO also lowered its 2023/24 cocoa production estimate to 4.330 MMT from 4.461 MMT noted in May. It further predicted a cocoa stocks-to-grindings ratio of 27.4%, a record low in 46 years.
More Cocoa News from Barchart
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
