At a Glance
- Cocoa futures on ICE experienced gains, with December NY cocoa up 0.70% and London cocoa up 1.46%.
- Prices were supported by a decline in ICE inventories and a weaker British pound influenced London cocoa.
- Initial price drops were due to forecasts of a global cocoa surplus from favorable West African weather.
- Supportive factors include a slowdown in Ivory Coast exports and reduced production projections for Nigeria.
- Bearish pressures remain from weak global demand, particularly in Asia and Europe, and declining North American chocolate sales.
Cocoa Market Recovers Amid Shifting Dynamics
December ICE NY cocoa futures (CCZ25) concluded Wednesday with a gain of 42 points (0.70%), while December ICE London cocoa #7 futures (CAZ25) advanced by 62 points (1.46%). This recovery followed recent price dips to one-week lows, primarily attributed to diminishing ICE cocoa inventories. Stocks monitored by ICE at U.S. ports reached a seven-month low, totaling 1,837,670 bags. The increase in London cocoa futures was further bolstered by a 2.75-month low in the British pound (^GBPUSD), making cocoa priced in sterling more appealing.
💡 Earlier in the trading session, cocoa prices saw a decline, driven by expectations of a global surplus. This outlook stemmed from favorable weather conditions and anticipated strong harvests in West Africa. Forecaster Vaisala indicated that scattered showers were expected across southern Nigeria and Cameroon in the upcoming days.
Production Outlook and Export Trends Influence Prices
Chocolate manufacturer Mondelez has noted that West African cocoa pod counts are currently tracking 7% above the five-year average and are significantly higher than the previous year’s crop. In Ivory Coast, the world’s leading cocoa producer, the main crop harvest has begun, with farmers expressing optimism regarding bean quality.
⚡ A significant factor supporting cocoa prices is a noticeable slowdown in exports from Ivory Coast. Official government data reveals that cocoa shipments from October 1 to October 26 for the current marketing year were down 24% year-on-year, amounting to 215,219 metric tons compared to 284,633 metric tons during the same period last year.
⚡ In contrast, cocoa arrivals at ports in Ghana, the second-largest producer, have surged. For the four weeks ending September 4, Ghana’s ports received 50,440 metric tons of cocoa, a substantial increase from approximately 11,000 metric tons in the corresponding period of the previous year. This surge in Ghana’s arrivals is exerting downward pressure on prices.
Global Demand Weakness Creates Bearish Pressure
A persistent bearish influence on cocoa prices is the current weakness in global demand. According to the Cocoa Association of Asia, Asian cocoa grindings in the third quarter fell by 17% year-on-year to 183,413 metric tons, marking the lowest Q3 grindings in nine years. Similarly, European cocoa grindings for Q3 decreased by 4.8% year-on-year to 337,353 metric tons, the lowest figure for a third quarter in a decade, as reported by the European Cocoa Association.
✅ North American Q3 cocoa grindings demonstrated a modest increase of 3.2% year-on-year, reaching 112,784 metric tons, as reported by the National Confectioners Association. It is worth noting that this figure might be influenced by the inclusion of new companies in the reporting process.
📌 Consumer demand for chocolate candy in North America has softened considerably. Sales volume saw a decline of over 21% in the 13 weeks ending September 7, when compared to the prior year, according to research firm Circana. This downturn is attributed to consumer concerns over escalating cocoa prices and the impact of tariffs on chocolate consumption.
Production Forecasts and International Cocoa Organization Data
Nigeria, the world’s fifth-largest cocoa producer, is anticipating a reduction in its output. The Nigeria’s Cocoa Association forecasts that 2025/26 cocoa production will decrease by 11% year-on-year to 305,000 metric tons, down from an estimated 344,000 metric tons for the 2024/25 crop year. In separate news, Nigeria reported a 15% year-on-year increase in August cocoa exports, totaling 17,239 metric tons.
📊 The International Cocoa Organization (ICCO) has revised its forecast for the 2023/24 global cocoa deficit to 494,000 metric tons, representing the largest deficit in over six decades. ICCO data indicates a 13.1% year-on-year decrease in 2023/24 cocoa production to 4.380 million metric tons. This has consequently pushed the global stocks-to-grindings ratio to a 46-year low of 27.0%.
📊 For the upcoming 2024/25 season, the ICCO projects a global cocoa surplus of 142,000 metric tons, which would mark the first surplus recorded in four years. Global cocoa production is estimated to rise by 7.8% year-on-year, reaching 4.84 million metric tons in 2024/25.
Market Summary
The cocoa markets have shown resilience, with prices recovering despite mixed supply pressures and demand signals. While export slowdowns in key producing regions and specific production challenges have provided some support, overarching concerns about global demand and consumer spending continue to influence market sentiment.