**Cocoa Prices Surge Amid Supply Concerns**
On March 3, cocoa prices increased significantly, with May ICE NY cocoa rising by 5.73% to close at $3,237 and May ICE London cocoa up by 4.99% to $2,319. This rally follows heightened concerns over shipping costs due to the ongoing conflict in Iran, which threatens the closure of the Strait of Hormuz, potentially restricting cocoa exports and elevating global shipping rates.
Data from the week’s Commitment of Traders report indicates a significant short position in London cocoa, which hit a net-short position of 29,049—its highest in over four years, increasing by 3,370. Meanwhile, the International Cocoa Organization (ICCO) has projected a global cocoa production surplus of 75,000 metric tons for the 2024/25 season, up from a prior estimate of 49,000 metric tons, as favorable growing conditions in West Africa are set to boost harvests.
**Market Dynamics Impacting Cocoa Inventory**
As of March 1, cocoa inventories increased to a 6.5-month high of 2,204,098 bags due to weak demand and international buyers hesitating to pay official prices set by major producers Ivory Coast and Ghana. These countries, responsible for over half of the world’s cocoa supply, recently announced significant cuts to farm-gate prices—down nearly 30% in Ghana and 57% in Ivory Coast—as they prepare for the upcoming mid-crop harvest.
