March ICE NY cocoa (CCH26) on Thursday closed down -124 (-2.44%). March ICE London cocoa #7 (CAH26) closed down -86 (-2.30%).
This week's slump in cocoa prices continued on Thursday, with NY cocoa sinking to a nearly 2-year low and London cocoa falling to a 1.5-month low. Signs of weak global cocoa demand are hammering prices. The European Cocoa Association reported on Thursday that Q4 European cocoa grindings fell -8.3% y/y to 304,470 MT, a bigger decline than expectations of -2.9% y/y and the lowest for a Q4 in 12 years.
Asian Q4 cocoa grindings are expected to fall -12% y/y to a 10-year low, and North American grindings are expected to increase slightly. North American Q4 cocoa grindings will be released later on Thursday, and Q4 Asian grindings will be released on Friday.
Favorable growing conditions in West Africa are also weighing on cocoa prices. Tropical General Investments Group recently said that favorable growing conditions in West Africa are expected to boost the February-March cocoa harvest in the Ivory Coast and Ghana, as farmers report larger and healthier pods compared with the same period last year.
Chocolate maker Mondelez recently said that the latest cocoa pod count in West Africa is 7% above the five-year average and "materially higher" than last year's crop. Harvest of the Ivory Coast's main crop has begun, and farmers are optimistic about its quality.
Cocoa prices have support on signs of smaller cocoa supplies from the Ivory Coast. Monday's cumulative data shows Ivory Coast farmers shipped 1.13 MMT of cocoa to ports this new marketing year (October 1 through January 11), down -2.6% from 1.16 MMT in the same period a year ago. The Ivory Coast is the world's largest cocoa producer.
Shrinking cocoa inventories are bullish for prices after ICE-monitored cocoa inventories held in US ports fell to a 10-month low of 1,626,105 bags on December 26. However, inventories have since recovered to a 1.25-month high of 1,680,417 bags on Thursday.
Cocoa prices have support on a tightening global supply outlook. On November 28, the International Cocoa Organization (ICCO) cut its global 2024/25 cocoa surplus estimate to 49,000 MT from a previous estimate of 142,000 MT. It also lowered its global cocoa production estimate for 2024/25 to 4.69 MMT from 4.84 MMT previously. In addition, Rabobank last Tuesday cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.
Cocoa prices were undercut on November 26 when the European Parliament approved a 1-year delay to the deforestation law, keeping cocoa supplies ample. The EU regulation, known as EUDR, aims to tackle deforestation in countries whose imports into the EU include key commodities such as soybeans and cocoa. The delay of the EUDR will allow EU countries to continue importing agricultural products from regions in Africa, Indonesia, and South America where deforestation is occurring.
A supportive factor for cocoa is lower cocoa production in Nigeria, the world's fifth-largest cocoa producer. Nigeria's Cocoa Association projects that Nigeria's 2025/26 cocoa production will fall by -11% y/y to 305,000 MT from a projected 344,000 MT for the 2024/25 crop year. In related news, Nigeria reported that its September cocoa exports were unchanged y/y at 14,511 MT.
On May 30, the International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 MT, the largest deficit in over 60 years. ICCO said 2023/24 cocoa production fell by -12.9% y/y to 4.368 MMT. ICCO on December 19 estimated a 2024/25 global cocoa surplus of 49,000 MT, marking the first surplus in four years. ICCO also said global cocoa production in 2024/25 rose by +7.4% y/y to 4.69 MMT.
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 here.
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