At a Glance
- Cocoa futures experienced a decline amid mixed market signals, influenced by trade policy changes and production forecasts.
- US trade policy adjustments, specifically removing tariffs on certain commodities, have impacted cocoa prices, though some tariffs remain.
- Concerns arise from weak global cocoa demand, evidenced by disappointing sales and reduced grinding activity in key regions.
- Conversely, signs of reduced export volumes from Ivory Coast and declining cocoa inventories offer price support.
- Production expectations for the upcoming season suggest a global surplus, contrasting with the significant deficit reported for the current season.
Market Performance and Trade Policy Impact
December ICE NY cocoa futures (CCZ25) saw a decrease of -33 points, or -0.62%, while December ICE London cocoa #7 futures (CAZ25) fell by -60 points, or -1.47%. This dip in cocoa prices is partly attributed to the US administration’s recent announcement to eliminate 10% reciprocal tariffs on commodities not produced in the United States, including cocoa. However, it’s important to note that US imports of cocoa from Brazil will continue to be subject to a 40% national-security tariff. Brazil is a significant cocoa producer, ranking as the fifth-largest globally in 2023.
Supply-Side Dynamics: Ivory Coast and West Africa
On the positive side for prices, there are indications of a slowdown in cocoa exports from Ivory Coast, the world’s leading cocoa producer. Government data for the period of October 1 through November 16 of the new marketing year reveals that farmers shipped 516,787 metric tons of cocoa to ports. This figure represents a decrease of 5.7% compared to the 548,494 metric tons recorded in the same period last year.
💡 Despite reaching 6-week highs in early November, cocoa prices have since retreated. This pullback is linked to expectations of a robust cocoa harvest in West Africa. Reports from Ivory Coast farmers suggest favorable conditions for cocoa trees. Additionally, recent dry weather has aided in the drying of harvested beans. In Ghana, farmers have also reported that advantageous weather conditions are promoting the rapid development of cocoa pods.
✅ Chocolate manufacturer Mondelez has indicated that the latest cocoa pod count in West Africa is 7% above the five-year average, and materially higher than the previous year’s crop. The main crop harvest in Ivory Coast has commenced, with farmers expressing optimism regarding its quality.
Demand Concerns and Regional Grinding Data
Global cocoa demand has shown signs of weakness, exerting downward pressure on prices. The CEO of Hershey, a prominent chocolate maker, noted in late October that chocolate sales during the recent Halloween season were disappointing. Halloween typically accounts for nearly 18% of annual US candy sales, making it the second-largest holiday for confectionery sales, behind Christmas.
📍 In Asia, the Cocoa Association of Asia reported on October 17 that third-quarter cocoa grindings fell by 17% year-over-year, reaching 183,413 metric tons. This marks the lowest third-quarter grinding figure in nine years.
📊 Similarly, the European Cocoa Association announced on October 16 that third-quarter European cocoa grindings decreased by 4.8% year-over-year to 337,353 metric tons, representing a ten-year low for the third quarter.
While the National Confectioners Association reported a 3.2% increase in North American cocoa grindings for the third quarter to 112,784 metric tons, this rise may be skewed by the inclusion of new reporting companies. Further underscoring weak consumer demand, North American sales volume for chocolate candy declined by over 21% in the 13 weeks ending September 7, when compared to the same period last year, according to data from research firm Circana.
Inventory Levels and Production Outlook
⚡ Shrinking ICE cocoa inventories are providing a supportive factor for cocoa prices. As of Friday, ICE-monitored cocoa inventories held at US ports fell to a 7.75-month low of 1,766,644 bags.
Nigerian Production and Global Forecasts
A supportive element for cocoa prices is the anticipated lower cocoa production in Nigeria, currently the world’s fifth-largest cocoa producer. The Cocoa Association of Nigeria projects a year-over-year decrease of 11% in Nigeria’s 2025/26 cocoa production, estimating it at 305,000 metric tons, down from a projected 344,000 metric tons for the 2024/25 crop year. In related developments, Nigeria reported that its September cocoa exports remained unchanged year-over-year at 14,511 metric tons.
International Cocoa Organization Projections
On May 30, the International Cocoa Organization (ICCO) revised its forecast for the 2023/24 global cocoa deficit to -494,000 metric tons, which is the largest deficit recorded in over six decades. The ICCO indicated that 2023/24 cocoa production fell by 13.1% year-over-year to 4.380 million metric tons. Furthermore, the ICCO stated that the global cocoa stocks-to-grindings ratio for 2023/24 declined to a 46-year low of 27.0%.
For the 2024/25 season, the ICCO has estimated a global cocoa surplus of 142,000 metric tons, signaling the first surplus in four years. The ICCO also reported an anticipated increase in global cocoa production for 2024/25 by 7.8% year-over-year, reaching 4.84 million metric tons.
Expert Summary
Cocoa markets are currently navigating a complex interplay of trade policy shifts, supply expectations, and demand trends. While recent trade policy adjustments have introduced some volatility, factors such as reduced exports from key producers and tightening inventories are providing underlying support. However, persistent concerns about global demand, supported by disappointing sales figures and declining grindings in major consumption regions, continue to weigh on prices. The outlook for the upcoming season suggests a potential shift towards a global surplus, contrasting sharply with the deficit experienced in the current year.
