**Cocoa Prices Rise Ahead of Holiday Weekend**
On May 19, 2023, cocoa prices saw gains, with July ICE NY cocoa (CCN26) rising by 0.66% to $25 and July ICE London cocoa #7 (CAN26) up by 0.21% to $6. This recovery followed a decline to 2.5-week lows as traders engaged in short covering ahead of the upcoming long holiday weekend in the US and UK.
**Supply Outlook and Market Influences**
The Ivory Coast recently increased its cocoa delivery estimate for the 2025/26 season to 2.2 million metric tons (MMT), up from a prior estimate of 1.8-1.9 MMT, supported by favorable weather conditions. Cumulative data indicates that farmers have shipped 1.61 MMT of cocoa this marketing year, reflecting a 1.9% increase year-on-year. Additionally, ICE cocoa inventories have peaked at a 1.75-year high of 2,692,616 bags, which is impacting price trends negatively due to anticipated abundance in supplies.
**Demand Dynamics and Weather Conditions**
Despite these inventory increases, strong consumer demand for chocolate has maintained some price support, as evidenced by positive earnings from major firms, Hershey and Mondelez International. However, weak cocoa grindings reports indicated a 3.8% decline in North American volumes and a 7.8% drop in European grindings. Weather patterns are also a concern, with the NOAA forecasting an 82% chance of an El Niño occurrence, which could adversely affect cocoa production in West Africa, a region contributing over 50% to global cocoa supply.
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