Cocoa prices surged on Tuesday, with July ICE NY cocoa rising by 4.92% to close at +191 and July ICE London cocoa up 14.14% to +3.80, reaching a 2.75-month high. This rally is attributed to early surveys indicating below-average growth in the West African cocoa crop, which could negatively impact the main harvest starting in October.
The prolonged closure of the Strait of Hormuz is also affecting cocoa prices by disrupting global supply chains and elevating costs for importers due to increased shipping rates and fertilizer supply issues. Current cocoa inventories reached a 20.5-month high of 2,667,760 bags.
Despite the price increase, reports indicate mixed trends in cocoa demand. North American cocoa grindings fell 3.8% year-over-year in Q1, while European grindings declined by 7.8% year-over-year, the lowest in 17 years. In contrast, Asian cocoa grindings rose by 5.2% year-over-year. The International Cocoa Organization also reported a global cocoa surplus of 75,000 MT projected for 2024/25, likely influenced by increased production estimates.
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