Cocoa Market Update
On Monday, cocoa futures on the December ICE NY closed lower, down by 23 points (or 0.44%), while the December ICE London Cocoa #7 fell by 60 points (1.47%).
The decline in cocoa prices follows last Friday’s announcement from the Trump administration regarding the removal of a 10% reciprocal tariff on non-U.S. goods, including cocoa. However, imports from Brazil still face a hefty 40% national security tariff. Notably, Brazil has recently become the fifth largest producer of cocoa globally.
Another contributing factor to the price drop is the slowdown in cocoa exports from the Ivory Coast, the top cocoa-producing country. Recent government data indicates that farmers there shipped 516,787 tonnes of cocoa from October 1 to November 16, which is a 5.7% decline from 548,494 tonnes during the same timeframe last year.
Cocoa prices began to fall after reaching a six-week high in early November, driven by optimistic expectations for a robust cocoa harvest in West Africa. Farmers in the Ivory Coast reported favorable growing conditions for their cocoa trees, and the recent dry weather has aided in the drying process of the beans. Meanwhile, cocoa producers in Ghana noted that good weather was promoting rapid development of their cocoa beans.
Chocolate manufacturer Mondelez has claimed that West Africa’s cocoa harvest is 7% above the five-year average and notably better than last year’s yield. The main harvest season in the Ivory Coast is just starting, and there’s a sense of optimism regarding quality.
However, global demand for cocoa remains weak. For instance, the CEO of Hershey stressed that chocolate sales during this year’s Halloween were disappointing, with this holiday accounting for nearly 18% of U.S. annual candy sales, coming in right after Christmas. Additionally, the Asia Cocoa Association reported a significant year-on-year drop in cacao milling volume in the third quarter, marking the lowest output in nine years. European cocoa crushing was also down 4.8% year-on-year in the same quarter, reflecting the lowest third quarter volume in a decade. North America saw a slight increase in cocoa milling, but largely due to new reporting companies. In related news, North American chocolate candy sales dropped over 21% in the 13 weeks concluding September 7 compared to the previous year, according to Circana data.
On a more positive note, a decline in ICE cocoa stocks is providing some support to prices. Cocoa stockpiles under ICE observation at U.S. ports fell to 1,766,644 bags, marking a 7.75-month low.
Looking ahead, Nigeria, the fifth largest cocoa producer, is also facing production declines. The Cocoa Association of Nigeria has forecast an 11% year-on-year drop in cocoa production for the 2025/26 season, estimating 305,000 tonnes compared to a projected 344,000 tonnes for the 2024/25 crop year. Interestingly, Nigeria’s cocoa exports remained stable, with September figures holding steady at 14,511 tonnes.
Moreover, on May 30, the International Cocoa Organization (ICCO) adjusted the global cocoa deficit for 2023/24 to a substantial -494,000 tonnes—marking the largest deficit observed in over 60 years. According to ICCO, 2023/24 cocoa production is estimated at 4.380 million metric tonnes, reflecting a 13.1% decrease from the prior year. The stock-to-crushed ratio has dipped to 27.0%, noted as the lowest in 46 years. However, ICCO is predicting a shift for 2024/25, with a projected surplus of 142,000 tonnes, signaling the first surplus in four years and estimating a production increase of 7.8% year-on-year to reach 4.84 million metric tonnes.
