December ICE NY cocoa (CCZ25) today is up +218 (+3.75%), and December ICE London cocoa #7 (CAZ25) is up +141 (+3.45%).
Cocoa prices are sharply higher today and posted 1-week highs on signs that an expected decline in global cocoa demand may not be as bad as initially feared. The European Cocoa Association reported today that Q3 European cocoa grindings fell -4.8% y/y to 337,353 MT, the lowest for a third quarter in 10 years. However, cocoa prices rallied as the -4.8% y/y decline was not as bad as some estimates of a fall of -10% y/y.
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Tighter cocoa inventories are supportive for prices after ICE-monitored cocoa inventories held in US ports fell to a 6-month low of 1,875,325 bags on Wednesday.
An excessive short position by commodity funds could exacerbate any short-covering rally, as funds boosted their net-short positions in London cocoa by 5,060 to 10,771 in the week ended October 7, the largest short position in more than three years, according to last Friday’s weekly Commitment of Traders (COT) data. The US government shutdown has delayed the release of figures for NY cocoa positioning.
On Monday, cocoa prices extended their two-month-long decline, with NY cocoa posting a 20-month nearest-futures low and London cocoa posting a 20.5-month nearest-futures low. Cocoa prices remain under pressure due to the outlook for abundant supplies amid weak demand.
The governments of the Ivory Coast and Ghana have recently increased the amount they pay farmers for their cocoa beans, which is expected to boost sales and cocoa supplies.
Cocoa prices have also 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.
The outlook for an improved cocoa crop in the Ivory Coast this year is also bearish for prices. 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 the quality of the crop.
Expectations of abundant global cocoa supplies are hammering cocoa prices. 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 producer of cocoa.
Cocoa has some support from a slowdown in the pace of cocoa exports from the Ivory Coast, the world’s largest cocoa producer. Monday’s government data showed that Ivory Coast farmers shipped 48,753 MT of cocoa to ports this marketing year from October 1-11, compared with 100,264 MT in the same period a year ago.
Quality concerns regarding the Ivory Coast’s mid-crop cocoa are supportive of prices. According to Rabobank, the poor quality of the Ivory Coast’s mid-crop is partly attributed to late-arriving rain in the region, which limited crop growth. The mid-crop is the smaller of the two annual cocoa harvests, which typically starts in April and ends in September. The average estimate for this year’s Ivory Coast mid-crop is 400,000 MT, down -9% from last year’s 440,000 MT.
Another supportive factor for cocoa is the smaller cocoa production in Nigeria, the world’s fifth-largest cocoa producer. Nigeria’s Cocoa Association projects Nigeria’s 2025/26 cocoa production will fall -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 from a February estimate of -441,000 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%. Looking ahead to 2024/25, ICCO forecasted a global cocoa surplus of 142,000 MT on February 28, 2024, marking the first surplus in four years. ICCO also projected that 2024/25 global cocoa production will rise +7.8% y/y to 4.84 MMT.
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