On May 24, 2023, cocoa prices rose as May ICE NY cocoa (CCK26) increased by 29 points (+0.91%) and May ICE London cocoa #7 (CAK26) gained 17 points (+0.72%). The increase is attributed to concerns about a potential fertilizer shortage in West Africa due to the closure of the Strait of Hormuz, a crucial passage for approximately 30% of the world’s fertilizer supply.
Despite the price rise, cocoa prices recently experienced a dip amidst expectations of a bumper cocoa crop in West Africa, where farmers in the Ivory Coast and Ghana reported improved pod development due to consistent rainfall. Current ICE cocoa inventories have hit a 7.75-month high of 2,335,682 bags. Additionally, Ghana and the Ivory Coast have both enacted significant cuts to the prices paid to cocoa farmers, reducing compensation by nearly 30% and 57%, respectively, for the upcoming seasons.
Moreover, recent reports show that cocoa shipments from the Ivory Coast have decreased by 2.8% year-over-year, with a total of 1.39 million metric tons reaching ports in the current marketing year. Global supply concerns are compounded by lower grindings, with European cocoa grindings down 8.3% year-over-year in Q4, the most significant drop in 12 years.
