**Cocoa Prices Decline Amid Weather Concerns and Increased Inventories**
Cocoa prices dropped on June 5, 2023, with July ICE NY cocoa (CCN26) down by $10 to $3,787 and July ICE London cocoa #7 (CAN26) down by $23 to $2,926, following updated weather forecasts predicting drier conditions in West Africa. Earlier price increases were driven by reports from Ivory Coast farmers of heavy rain damaging cocoa crops.
As of June 2, money managers held a net short position of 21,111 contracts in NY cocoa, the highest in over three years, potentially exacerbating price volatility. Concurrently, ICE cocoa inventories surged to a 1.75-year high of 2,929,074 bags last week. Factors supporting cocoa prices include forecasts of a smaller global surplus and potential weather-related production risks linked to an expected El Niño, which NOAA estimates has an 82% chance of occurring this year.
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