December ICE NY Cocoa (CCZ25) closed down -172 (-2.78%) on Friday, and December ICE London Cocoa #7 (CAZ25) closed down -112 (-2.53%).
On Friday, cocoa prices fell sharply for the third consecutive day and reached a one-week low. After hitting a 5-week high on Tuesday, cocoa prices have declined amid hopes of a bumper cocoa crop in West Africa. Cocoa farmers in Ivory Coast report that cocoa trees are doing well, and recent dry weather helped dry out harvested beans, while cocoa farmers in Ghana say favorable weather is allowing cocoa beans to grow faster.
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Chocolate maker Mondelez recently said the latest cocoa pod count in West Africa is 7% above the five-year average and “materially higher” than last year’s harvest. The harvest of Ivory Coast’s main crop has just begun, and farmers are optimistic about its quality.
On Tuesday, cocoa prices hit a 5-week high as short-covering emerged from last Thursday’s news that the administrator of the Bloomberg Commodity Index (BCOM) said cocoa would be included in the index for the first time in 2 decades starting in January. Assets tracking the BCOM index stood at approximately $109 billion at the end of 2024, suggesting that cocoa’s 1.7% weighting in the index could spur significant flows into the market from the passive funds that track it. According to Peak Trading Research LLC, “Funds will need to purchase approximately $1.9 billion in cocoa futures over the next 80 days.”
A slowdown in cocoa exports from Ivory Coast, the world’s biggest cocoa producer, also supported cocoa prices. Government data on Monday showed Ivory Coast farmers shipped 304,840 metric tons of cocoa to ports from October 1 to November 2 in this new marketing year, down -16% from 365,072 metric tons in the same period a year earlier.
Shrinking ICE cocoa inventories are supportive of cocoa prices. ICE-monitored cocoa stockpiles at US ports fell on Thursday to a 7.5-month low of 1,793,757 bags.
Cocoa prices have been cut due to fears that higher cocoa prices and tariffs could reduce demand for chocolate. North American sales volume of chocolate candy in the 13 weeks ending Sept. 7 was down more than -21% compared with the same period last year, according to data from research firm Circana.
Weak global cocoa demand is keeping prices bearish. Last Thursday, the CEO of chocolate maker Hershey said that chocolate sales this Halloween season were “disappointing.” Halloween accounted for approximately 18% of annual US candy sales in 2024, second only to Christmas. Meanwhile, on October 17 the Cocoa Association of Asia reported that Q3 Asia cocoa grinding fell -17% y/y to 183,413, the smallest grinding for Q3 in 9 years. The European Cocoa Association reported on October 16 that European cocoa grinding volumes fell -4.8% in the third quarter to 337,353 metric tons, the lowest for the third quarter in 10 years. The National Confectioners Association reported Q3 North American cocoa grinding increased +3.2% year-over-year to 112,784 metric tons, but the data was skewed by the addition of new reporting companies.
A supporting factor for cocoa is low cocoa production in Nigeria, the world’s fifth largest cocoa producer. The Cocoa Association of Nigeria estimates Nigeria’s 2025/26 cocoa production will decline by -11% to 305,000 metric tons from the estimated 344,000 metric tons for the 2024/25 crop year. In related news, Nigeria reported that its September cocoa exports were unchanged year-on-year at 14,511 metric tons.
On 30 May, the International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 metric tons, the largest deficit in more than 60 years. ICCO said 2023/24 cocoa production fell -13.1% y/y to 4.380 MMT. ICCO said the 2023/24 global cocoa stocks-to-grinding ratio fell to a 46-year low of 27.0%. For 2024/25, ICCO forecasts a global cocoa surplus of 142,000 metric tons, the first surplus in four years. ICCO also said global cocoa production rose +7.8% y/y to 4.84 MMT in 2024/25.
On the date of publication, Rich Asplund did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy here for more information.
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