Cocoa Prices Tumble Amid Supply Pressures and Mixed Demand Signals
Sharp Declines in NY and London Cocoa Markets
December ICE NY cocoa (CCZ24) closed on Thursday down -245 (-3.50%), while December ICE London cocoa #7 (CAZ24) fell -205 (-3.81%).
Weather Impacts and Shipping Figures from the Ivory Coast
Cocoa prices continued to slide on Thursday, extending a selloff that has persisted throughout the week. The NY cocoa futures hit a nearest-futures low not seen in 7-3/4 months, and London cocoa reached a two-week low. The situation in the Ivory Coast, which is the largest cocoa producer globally, is contributing to these price drops. According to Monday’s government data, farmers in the Ivory Coast shipped 192,804 MT of cocoa to ports from October 1 to October 20, a 12.9% increase from the 170,794 MT shipped during the same period last year.
Regulatory Updates and Increased Production Forecasts
Additionally, negative sentiment was fueled by the Ivory Coast regulator, Le Conseil Cafe-Cacao, which raised its cocoa production estimate for 2024/25 to between 2.1 MMT and 2.2 MMT, up from a previous forecast of 2.0 MMT. This comes at a time when global demand has been somewhat mixed. Last Thursday, the National Confectioners Association announced that North American cocoa grindings rose by 12% year-over-year to 109,264 MT. Conversely, the Cocoa Association of Asia indicated a modest increase of 2.6% year-over-year to 216,998 MT in Asian cocoa grindings. However, the European Cocoa Association noted a decline of 3.3% year-over-year in European grindings, which totaled 354,335 MT in Q3.
Global Stockpiles and Support Factors
Shrinking global cocoa inventories provide a counterbalance to falling prices. According to the ICE, cocoa stocks monitored at US ports have dropped for 17 consecutive months, hitting a 15-year low of 1,833,436 bags as of Thursday. Support for prices also came from Ghana, where the Cocoa Board (Cocobod) revised its 2024/25 cocoa production estimate down to 650,000 MT from a June estimate of 700,000 MT, due to adverse weather conditions and crop diseases. This marks a low point for Ghana’s 2023/24 cocoa harvest at 425,000 MT, the lowest in 23 years.
Challenges from Other Major Producers
Meanwhile, increased production in Cameroon, the fifth-largest cocoa producer, poses a challenge for cocoa prices. On August 21, the National Cocoa and Coffee Board reported a 1.2% year-over-year increase in Cameroon’s cocoa production for the 2023/24 season, reaching 266,725 MT. Additionally, Nigeria, the sixth-largest producer, saw its cocoa exports rise by 6.8% year-over-year to 14,984 MT as of August.
Global Deficits and Production Adjustments
In a notable development, the International Cocoa Association (ICCO) adjusted its global cocoa deficit estimate for 2023/24 to -462,000 MT from -439,000 MT in May, marking the largest deficit observed in over 60 years. Furthermore, the ICCO has cut its 2023/24 cocoa production estimate to 4.330 MMT from a previous estimate of 4.461 MMT. The ICCO also projected that global cocoa stocks will match just 27.4% of grindings, the lowest ratio in 46 years.
More Cocoa News from Barchart
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
