Cocoa Prices Hit 1.75-Year Low Amid Updated EU Regulations
On Wednesday, cocoa prices tumbled, with December ICE NY Cocoa (CCZ25) down by 319 points (-6.06%) and December ICE London Cocoa #7 (CAZ25) falling 256 points (-6.32%). This drop brings cocoa prices to their lowest point in over a year and a half.
The decline is largely influenced by renewed discussions among European Union countries about extending existing deforestation regulations for another year. The EU’s EUDR aims to address deforestation linked to critical imports such as cocoa and soy from regions like Africa, Indonesia, and South America. The postponement of these regulations, initially set for a decision in late December, alleviates some supply worries, enabling continued imports from areas that have experienced deforestation.
Additionally, expectations for a substantial cocoa harvest in West Africa are weighing on prices. Farmers in Ivory Coast report robust growth from their cocoa trees, thanks in part to favorable dry weather that aids in the drying process of cocoa beans. Meanwhile, cocoa growers in Ghana are seeing their beans develop quicker due to good weather.
On top of this, Mondelez, the chocolate manufacturer, noted that the latest cocoa crop from West Africa surpasses the five-year average by 7% and is “significantly higher” than last year’s lot. The main harvest period in Ivory Coast has just commenced, and many farmers are optimistic about the quality of their yield.
There’s also market pressure following a recent announcement from the Trump administration about removing a 10% reciprocal tariff on imported goods, which includes cocoa. This decision contributes further to the downward trend in prices.
Meanwhile, demand for cocoa appears weak globally. Hershey’s CEO stated that chocolate sales during this year’s Halloween season were disappointing. Given that Halloween represents nearly 18% of annual candy sales in the U.S., this is notable. Furthermore, the Asia Cocoa Association reported a substantial drop of 17% in cacao milling volume in Asia for the third quarter compared to last year. This marks the lowest figure in nine years. The European Cocoa Association also indicated a 4.8% year-on-year decrease in cocoa crushing volumes in Europe for the same quarter, reaching a decade low. Although North America reported a slight increase in cocoa milling volume by 3.2%, this may be skewed by new companies reporting data. Additionally, chocolate sales in North America have seen a significant drop of over 21% in recent weeks.
A potential silver lining for cocoa prices could arise from a slowdown in exports from Ivory Coast, the leading cocoa-producing nation. According to government data, Ivorian farmers exported 516,787 tonnes from October 1 to November 16—5.7% less than the same period last year.
Support for cocoa prices is also evident from declining ICE cocoa stock levels, which fell to 1,740,127 bags, the lowest in eight months.
Another concern is the projected decline in cocoa production in Nigeria, which is the fifth largest cocoa producer globally. The Cocoa Association of Nigeria projects a 11% drop in cocoa production for the 2025/26 crop, from 344,000 tonnes to 305,000 tonnes. In September, Nigeria reported flat exports year-on-year at 14,511 tonnes.
In broader market forecasts, the International Cocoa Organization (ICCO) recently adjusted its global cocoa deficit estimate for 2023/24 to 494,000 tonnes, the largest shortfall in over six decades. Cocoa production is expected to decline by 13.1%, totaling 4.380 million metric tonnes. The ICCO also noted that the global cocoa stock-to-crushed ratio has dropped to 27.0%, marking a 46-year low. Meanwhile, projections for 2024/25 suggest a return to surplus, estimated at 142,000 tonnes, alongside a predicted 7.8% rise in production.
