December ICE NY cocoa (CCZ25) on Thursday closed up +14 (+0.23%), and December ICE London cocoa #7 (CAZ25) closed up +19 (+0.44%).
Cocoa prices recovered from early losses on Thursday and settled higher as shrinking ICE cocoa inventories sparked short covering in cocoa futures. ICE-monitored cocoa inventories held in US ports fell to a 7-month low of 1,819,808 bags on Thursday. London cocoa also found support Thursday from weakness in the British pound (^GBPUSD). The pound fell to a 6.5-month low on Thursday, boosting cocoa prices, which are priced in sterling.
Cocoa prices initially moved lower on Thursday amid concerns about cocoa demand. Comments from the CEO of chocolate-maker Hershey weighed on cocoa prices Thursday when he said chocolate sales this Halloween season have been "disappointing." Halloween made up nearly 18% of annual US candy sales in 2024, second only to Christmas.
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. The harvest of the Ivory Coast's main crop has just begun, and farmers are optimistic about its quality.
Cocoa prices are supported by a slowdown in cocoa exports from the Ivory Coast, the world's largest cocoa producer. Monday's government data showed that Ivory Coast farmers shipped 215,219 MT of cocoa to ports this new marketing year, from October 1 through October 26, down -24% from 284,633 MT in the same period a year ago.
Weak global cocoa demand is bearish for prices. The Cocoa Association of Asia on October 17 reported that Q3 Asia cocoa grindings fell by -17% y/y to 183,413, the smallest grindings for a Q3 in 9 years. The European Cocoa Association on October 16 reported that Q3 European cocoa grindings fell -4.8% y/y to 337,353 MT, the lowest for a third quarter in 10 years. The National Confectioners Association reported that Q3 North American cocoa grindings rose +3.2% y/y to 112,784 MT, but the addition of new reporting companies skewed the data.
Cocoa prices have been under pressure over the past two months amid fears that high cocoa prices and tariffs could dampen chocolate demand. North American sales volume of chocolate candy was down more than -21% in the 13 weeks ending September 7, compared to the same period last year, according to data from research firm Circana.
Cocoa deliveries in Ghana have surged, weighing on prices. Cocoa arrivals to ports in Ghana in the four weeks ending September 4 reached 50,440 MT compared to about 11,000 MT delivered in the same period in 2024. Ghana is the world's second-largest cocoa producer.
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 August cocoa exports rose +15% y/y to 17,239 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 -13.1% y/y to 4.380 MMT. ICCO stated that the 2023/24 global cocoa stocks-to-grindings ratio declined to a 46-year low of 27.0%. For 2024/25, ICCO estimated a global cocoa surplus of 142,000 MT, marking the first surplus in four years. ICCO also said global cocoa production in 2024/25 rose by +7.8% y/y to 4.84 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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