December ICE NY cocoa (CCZ25) has seen a notable increase today, rising by +218 (+3.75%). Similarly, December ICE London cocoa #7 (CAZ25) is up +141 (+3.45%).
Cocoa prices have surged sharply today, reaching one-week highs as signs emerge that the anticipated decline in global cocoa demand may not be as severe as initially projected. The European Cocoa Association reported a 4.8% year-on-year decrease in Q3 European cocoa grindings, totaling 337,353 MT, marking the lowest figure for a third quarter in a decade. However, the decline was less severe than some forecasts predicting a drop of 10% year-on-year, which contributed to the rally in cocoa prices.
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Tighter cocoa inventories are also lending support to prices, as ICE-monitored cocoa stocks in U.S. ports have fallen to a six-month low of 1,875,325 bags as of Wednesday. Additionally, an excessive short position held by commodity funds could amplify any short-covering rally. Recent data indicates that funds increased their net-short positions in London cocoa by 5,060 to 10,771 in the week ending October 7, marking the largest short position in over three years. The U.S. government shutdown has delayed the release of figures for NY cocoa positioning.
Earlier this week, cocoa prices extended a two-month-long decline, with NY cocoa hitting a 20-month nearest-futures low and London cocoa reaching a 20.5-month nearest-futures low. The market remains under pressure due to expectations of abundant supplies amid weak demand.
In a bid to boost sales and cocoa supplies, the governments of the Ivory Coast and Ghana have recently increased the payments made to farmers for their cocoa beans. This move is expected to positively impact the market.
Over the past two months, cocoa prices have faced downward pressure due to concerns that high cocoa prices and tariffs may dampen chocolate demand. According to research firm Circana, North American sales volume of chocolate candy fell by more than 21% in the 13 weeks ending September 7 compared to the same period last year.
The outlook for an improved cocoa crop in the Ivory Coast this year is also bearish for prices. Chocolate maker Mondelez recently reported 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.
Expectations of abundant global cocoa supplies are weighing heavily on cocoa prices. Deliveries in Ghana have surged, with cocoa arrivals to ports in the four weeks ending September 4 reaching 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.
Despite this, cocoa prices are receiving some support from a slowdown in the pace of cocoa exports from the Ivory Coast, the world’s largest cocoa producer. Recent government data indicated that Ivory Coast farmers shipped 48,753 MT of cocoa to ports from October 1-11, down from 100,264 MT during the same period last year.
Quality concerns regarding the Ivory Coast’s mid-crop cocoa are also providing some support for prices. Rabobank noted that poor quality in the mid-crop is partly due to late-arriving rain, which limited crop growth. The mid-crop, which is the smaller of the two annual cocoa harvests, typically starts in April and ends in September. This year’s average estimate for the Ivory Coast mid-crop stands at 400,000 MT, down 9% from last year’s 440,000 MT.
Another factor supporting cocoa prices is the anticipated decline in cocoa production in Nigeria, the world’s fifth-largest cocoa producer. The Nigeria Cocoa Association projects that cocoa production for the 2025/26 crop year will fall by 11% year-on-year to 305,000 MT, down from a projected 344,000 MT for the 2024/25 crop year. In related news, Nigeria reported a 15% year-on-year increase in cocoa exports for August, totaling 17,239 MT.
On May 30, the International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 MT, up from a February estimate of -441,000 MT, marking the largest deficit in over 60 years. ICCO reported a 13.1% year-on-year decline in cocoa production, totaling 4.380 MMT, and noted that the global cocoa stocks-to-grindings ratio has fallen to a 46-year low of 27.0%. Looking ahead to 2024/25, ICCO forecasts a global cocoa surplus of 142,000 MT, marking the first surplus in four years, with production expected to rise by 7.8% year-on-year 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.
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