Cocoa Prices Experience Minor Declines Amidst Supply Insights
On Wednesday, March ICE NY Cocoa (CCH26) ended down by 6, or 0.12%, while December ICE London Cocoa #7 (CAZ25) fell by 10, which is 0.27%. Despite the drop, cocoa prices remain above the 1.75-year low hit last Wednesday. This comes in the wake of the European Parliament approving a one-year extension for deforestation laws, which ensures that cocoa supply is still ample. The EU regulation, referred to as EUDR, is designed to combat deforestation in nations that export essential commodities, including cocoa and soy, to the EU. Postponing the EUDR will permit EU nations to keep importing agricultural goods from deforested regions of Africa, Indonesia, and South America.
Moreover, expectations for a significant cocoa harvest from West Africa are contributing to the lower prices. Farmers in Ivory Coast report that their cocoa trees are thriving, with recent dry conditions aiding the drying of the beans. In Ghana, good weather seems to be accelerating the development of cocoa beans.
Recently, Mondelez, a well-known chocolate producer, revealed that West Africa’s latest cocoa harvest was 7% higher than the five-year average and notably exceeded last year’s production levels. The harvesting season in Ivory Coast has just commenced, and farmers are feeling hopeful about the quality of the cocoa.
A decline in cocoa prices also followed the announcement from the Trump administration on November 14, which scrapped a 10% tariff on non-U.S. goods, including cocoa. This decision also ended a 40% tariff on food imports from Brazil, a country that is among the world’s leading cocoa producers.
Interestingly, lower cocoa shipments at Ivorian ports seem to be buoying prices. Data indicates that Ivorian farmers have sent 618,899 tonnes of cocoa to ports from October 1 to November 23, reflecting a 3.7% decrease from 642,500 tonnes during the same timeframe last year. Ivory Coast remains the largest producer of cocoa globally.
Additionally, decreasing stocks of cocoa at ICE are helping to stabilize prices. The inventory under ICE surveillance at U.S. ports has recently dropped to 1,709,185 bags, marking the lowest amount in over eight months.
However, the overall market sentiment is somewhat negative due to weakened global demand for cocoa. The CEO of Hershey stated on October 30 that this year’s Halloween chocolate sales were “disappointing,” a period that typically captures around 18% of annual candy sales in the U.S., falling just behind Christmas. Furthermore, the Asia Cocoa Association reported a 17% year-on-year decrease in its cacao crushing volume during the third quarter, marking the lowest rate in nine years. In Europe, the Cocoa Association noted a 4.8% year-on-year decline in cocoa crushing volumes, the lowest in a decade. Conversely, the National Confectionery Association reported some growth in North American cocoa milling volumes by 3.2% year-on-year in the same quarter, although this data appears somewhat skewed due to the addition of new reporting companies. In a related note, North American chocolate candy sales dropped by over 21% in the 13-week period ending September 7 compared to the previous year, as per data from Circana.
On a related note, a decline in cocoa production in Nigeria, which ranks fifth globally in cocoa production, is providing some support for cocoa prices. The Cocoa Association of Nigeria forecasts cocoa output for 2025/26 to be around 305,000 tonnes, an 11% drop from the anticipated 344,000 tonnes for the 2024/25 crop year. Meanwhile, Nigeria’s cocoa exports remained steady at 14,511 tonnes in September when compared to the previous year.
In a broader context, the International Cocoa Organization (ICCO) reported on May 30 that the global cocoa deficit for 2023/24 is projected at 494,000 tonnes, marking the largest deficit seen in over 60 years. The ICCO estimates cocoa production for 2023/24 at 4.380 million metric tonnes, a decline of 13.1% from the prior year. Additionally, the global cocoa stock-to-crushed ratio has fallen to 27.0% for 2023/24, the lowest in 46 years. Looking ahead, the ICCO predicts a surplus of 142,000 tonnes in 2024/25, the first surplus observed in four years, with global cocoa production projected to rise by 7.8% year-on-year to 4.84 million metric tonnes.
