Cocoa Prices Decline Amid Mixed Demand and Rising Production Estimates
Cocoa Market Experiences Significant Drop
December ICE NY cocoa (CCZ24) closed down -327 (-4.51%) on Wednesday, while December ICE London cocoa #7 (CAZ24) fell by -176 (-3.10%).
Dollar Dollar’s Impact on Commodity Prices
Cocoa prices dropped sharply on Wednesday, hitting one-week lows. The rally of the dollar index (DXY00) to a four-month high negatively affected most commodity prices, cocoa included. Further pressure on cocoa prices came from the advancing cocoa harvest in the Ivory Coast, the largest cocoa producer worldwide.
Ivory Coast Harvest Exceeds Last Year
Recent government data from the Ivory Coast revealed farmers shipped 365,072 metric tons (MT) of cocoa to ports between October 1 and November 3, representing a 26% increase from the 288,686 MT shipped during the same period last year.
Production Estimates Revised Upwards
Further influencing prices, the Ivory Coast’s regulatory body, Le Conseil Cafe-Cacao, raised its cocoa production estimate for 2024/25 to a range of 2.1-2.2 million metric tons (MMT), up from an earlier June forecast of 2.0 MMT.
Mixed Demand Indicators from Global Regions
On the demand side, the outlook has been mixed. According to the National Confectioners Association, North American cocoa grindings increased by 12% year-over-year to 109,264 MT in Q3. Similar growth was observed in Asia, where the Cocoa Association of Asia reported a 2.6% increase to 216,998 MT. In contrast, the European Cocoa Association observed a decline in European Q3 cocoa grindings, which fell by 3.3% year-over-year to 354,335 MT.
Declining Stockpiles May Support Prices
On the positive side, shrinking global cocoa stockpiles could lend some support to cocoa prices. ICE-monitored cocoa inventories in US ports hit a 19-year low on Wednesday, standing at 1,728,817 bags—a decline that has persisted over the past 17 months.
Ghana’s Production Estimates Lowered
Ghana’s Cocoa Board (Cocobod) also cut its 2024/25 cocoa production estimate to 650,000 MT from 700,000 MT due to adverse weather and crop diseases. This year’s harvest in Ghana, the second-largest cocoa producer, fell to a 23-year low at 425,000 MT, with the new harvest set to begin in October.
Increase in Production from Other African Nations
Conversely, an uptick in cocoa production from Cameroon, ranked as the fifth-largest cocoa producer, has created some bearish sentiment. On August 21, Cameroon’s National Cocoa and Coffee Board reported a 1.2% year-over-year increase in cocoa production to 266,725 MT. Likewise, Nigeria, the sixth-largest cocoa producer, saw its August cocoa exports rise by 6.8% year-over-year to 14,984 MT.
Global Cocoa Deficit Widens
In a bullish development, the International Cocoa Association (ICCO) announced on August 30 that its estimate for the global cocoa deficit in 2023/24 was raised to -462,000 MT, marking the largest deficit in over 60 years. The ICCO also reduced its production estimate for the same period to 4.330 MMT from 4.461 MMT, predicting the lowest global stocks/grindings ratio in 46 years at 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.
