Cocoa Prices Decline Amid Increased Ivory Coast Harvest
December ICE NY cocoa (CCZ24) closed down -234 (-2.73%) on Wednesday. Meanwhile, December ICE London cocoa #7 (CAZ24) also dropped, closing down -29 (-0.40%).
Favorable Weather Aids Harvesting
On Wednesday, cocoa prices fell as favorable weather conditions in West Africa allowed farmers to return to their fields and continue harvesting the main crop. An increase in supplies from the Ivory Coast, the world’s largest cocoa producer, adds to the downward pressure on prices.
Record Shipments from Ivory Coast
According to government data released Monday, farmers in the Ivory Coast shipped 548,494 MT of cocoa to ports between October 1 and November 17, marking a significant increase of +32% compared to the 415,523 MT shipped during the same period last year. Further compounding this situation, the Ivory Coast’s cocoa regulator, Le Conseil Cafe-Cacao, raised its 2024/25 production estimate from a previous forecast of 2.0 MMT to a range of 2.1-2.2 MMT, which has also influenced pricing.
Weather Fluctuations Impact Prices
Earlier adverse weather in the region had initially boosted cocoa prices, with London cocoa hitting a four-month high Tuesday and NY cocoa reaching a two-and-a-half-month high last Friday. Heavy rains had flooded many fields, raising concerns about crop quality and increasing the risk of disease. Recently harvested beans from the Ivory Coast are showing lower quality, with a count of about 105 beans per 100 grams. Exporters prefer lower count beans for better quality.
Declining Cocoa Inventories Provide Support
Despite the overall downturn, shrinking global cocoa stockpiles offer some support for prices. As of Tuesday, ICE-monitored cocoa inventories in U.S. ports reached a 19-year low of 1,620,242 bags, a decline seen for the past 17 months.
Mixed Global Demand Affecting Prices
News regarding global cocoa demand has been mixed. The National Confectioners Association reported on October 17 that North American cocoa grindings increased +12% year-on-year to 109,264 MT. Similarly, the Cocoa Association of Asia noted a +2.6% rise year-on-year to 216,998 MT. However, the European Cocoa Association reported a downturn, with European cocoa grindings falling -3.3% year-on-year to 354,335 MT.
Ghana’s Reduced Production
Support for cocoa prices came when Ghana’s Cocoa Board (Cocobod) on August 20 reduced its 2024/25 production estimate to 650,000 MT, down from June’s forecast of 700,000 MT. Due to adverse weather and crop diseases, Ghana’s 2023/24 cocoa harvest fell to a 23-year low of 425,000 MT. As the second-largest cocoa producer globally, Ghana’s harvest season begins in October.
Cameroon’s Production Increases
Conversely, an increase in cocoa production in Cameroon, the fifth-largest producer, poses a bearish influence on prices. The National Cocoa and Coffee Board reported a +1.2% year-on-year rise in 2023/24 production to 266,725 MT. Similarly, Nigeria’s cocoa exports rose +6.8% to 14,984 MT.
Global Cocoa Deficits Present Bullish Outlook
Adding a bullish factor, the International Cocoa Association (ICCO) raised its global cocoa deficit estimate for 2023/24 to -462,000 MT from May’s estimate of -439,000 MT, marking the largest deficit in more than 60 years. The ICCO also cut its production estimate from 4.461 MMT to 4.330 MMT. The projected cocoa stocks to grindings ratio is set at its lowest level in 46 years at 27.4%.
On the date of publication, Rich Asplund did not hold positions in any of the securities mentioned in this article. All information and data presented are for informational purposes. For more details, please refer to the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
