Cocoa Prices Surge Amid Supply Fluctuations
Market Rebound Driven by Technical Factors and Production Updates
December ICE NY cocoa (CCZ24) increased by +21 (+0.31%) today, while December ICE London cocoa #7 (CAZ24) rose by +50 (+0.97%).
After an initial drop, cocoa prices showed a moderate recovery. This upswing can be attributed to oversold conditions leading to technical short covering. Over the past week, these prices faced significant declines, with New York cocoa hitting an 8-month low for nearest futures and London cocoa reaching a 3-week low. Ongoing harvest pressures in Ivory Coast, the world’s largest cocoa producer, have contributed to these price declines. Recent government data indicated that from October 1 to October 20, farmers shipped 192,804 MT of cocoa to ports, marking a 12.9% increase over last year’s figure of 170,794 MT.
Recently, prices also faced downward pressure from Ivory Coast’s regulator, Le Conseil Cafe-Cacao, which raised its 2024/25 cocoa production estimate to between 2.1 MMT and 2.2 MMT, up from a previous forecast of 2.0 MMT.
Mixed signals regarding global cocoa demand have emerged. The National Confectioners Association reported a 12% year-over-year increase in North American cocoa grindings for Q3, totaling 109,264 MT. Additionally, the Cocoa Association of Asia noted a 2.6% rise in Q3 cocoa grindings, reaching 216,998 MT. Conversely, the European Cocoa Association reported a decrease of 3.3% in European cocoa grindings for the same period, totaling 354,335 MT.
Another bullish factor is the decline in global cocoa inventories. Cocoa stocks monitored by ICE at U.S. ports have been trending downwards for the last 17 months and recently hit a 15-year low of 1,833,436 bags.
Support for cocoa prices also emerged after Ghana’s Cocoa Board (Cocobod) reduced its 2024/25 production estimate from 700,000 MT to 650,000 MT on August 20. Due to adverse weather and crop diseases, Ghana’s cocoa harvest for 2023/24 fell to a 23-year low of 425,000 MT. As the second-largest cocoa producer globally, Ghana’s upcoming harvest begins in October.
In contrast, an increase in cocoa production from Cameroon, the fifth-largest cocoa producer, may weigh on prices. On August 21, the National Cocoa and Coffee Board of Cameroon reported a 1.2% year-over-year rise in production for 2023/24, amounting to 266,725 MT. Additionally, Nigeria, the sixth-largest producer, experienced a 6.8% rise in cocoa exports in August, totaling 14,984 MT.
In a significant development, the International Cocoa Association (ICCO) raised its 2023/24 global cocoa deficit projection to -462,000 MT, an increase from May’s estimate of -439,000 MT. This marks the largest deficit in more than 60 years. The ICCO also revised its global cocoa production estimate down to 4.330 MMT, compared to the prior estimate of 4.461 MMT. Projected global cocoa stocks to grindings ratio is now set at a 46-year low of 27.4%.
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 are 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.
