Cocoa Prices Dip Despite Strong Supply in Ivory Coast

Market Update: March NY Cocoa and December London Cocoa Show Decline

March ICE NY cocoa (CCH25) is down -70 (-0.77%), while December ICE London cocoa #7 (CAZ24) decreases by -95 (-1.22%) today.

Cocoa prices have edged lower as the cocoa harvest in Ivory Coast accelerates. Recent government data indicates that farmers in the Ivory Coast shipped 642,500 MT of cocoa to ports between October 1 and November 24. This marks a significant 34% increase compared to 415,523 MT during the same period last year.

Just last Friday, NY cocoa reached a 2-1/2 month high, and London cocoa hit a 4-1/4 month high. Heavy rains in the region have heavily influenced prices, with reports indicating high rates of cocoa bud mortality on trees due to these conditions. These rains have led to flooding, a greater risk of disease, and overall decline in crop quality.

Currently, recently harvested cocoa beans from the Ivory Coast are of lower quality, with counts of approximately 105 beans per 100 grams. The Ivory Coast cocoa regulator permits exporters to purchase bean counts ranging from 80 to slightly above 100 for every 100 grams, with lower counts indicating superior quality cocoa.

The tightening of global cocoa stockpiles adds upward pressure on prices. Cocoa inventories monitored by ICE stored in U.S. ports have been on a downward trend for the past 1-1/2 years, recently reaching a 19-year low of 1,595,940 bags.

However, increased cocoa supplies from the Ivory Coast—a key player in the market—could weigh down prices. The Ivory Coast regulator, Le Conseil Cafe-Cacao, on October 18 raised its production forecast for the 2024/25 season to between 2.1-2.2 MMT, up from its previous estimate of 2.0 MMT in June.

Mixed signals from global cocoa demand have emerged. The National Confectioners Association reported a 12% year-on-year increase in North American cocoa grindings for Q3, totaling 109,264 MT. Conversely, the Cocoa Association of Asia noted a minor rise of 2.6% year-on-year, amounting to 216,998 MT of cocoa grindings. However, the European Cocoa Association reported a 3.3% year-on-year decline in European Q3 grindings, which stood at 354,335 MT.

Support for cocoa prices became evident after Ghana’s Cocoa Board announced on August 20 that it was lowering its cocoa production estimate for 2024/25 to 650,000 MT, down from 700,000 MT predicted in June. Ghana’s cocoa harvest in 2023/24 fell to a 23-year low of 425,000 MT due to adverse weather and crop diseases. As the world’s second-largest cocoa producer, Ghana began its 2024/25 cocoa harvest in October.

In a bullish move, the International Cocoa Association (ICCO) on August 30 raised its estimate of the global cocoa deficit for 2023/24 to -462,000 MT from May’s estimate of -439,000 MT, indicating the largest deficit seen in over 60 years. The ICCO also revised down its global cocoa production estimate to 4.330 MMT from 4.461 MMT made in May. Additionally, a projected stocks-to-grindings ratio of 27.4% would represent a 46-year low.

On the date of publication, Rich Asplund did not hold any positions in the mentioned securities. All information provided is for informational purposes only. For further details, please refer to the Barchart Disclosure Policy
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.