Cocoa Prices Experience Significant Increase
As of today, December ICE NY Cocoa (CCZ25) rose by 164 points, or 3.32%. Meanwhile, December ICE London Cocoa #7 (CAZ25) increased by 72 points, or 1.90%.
The rise in cocoa prices can be attributed to a weaker dollar, which has prompted some short covering in cocoa futures. These futures had been heavily oversold after a notable decline over recent weeks.
Another factor supporting cocoa prices is the drop in ICE cocoa stocks. The inventory of cocoa under ICE observation at U.S. ports slid to 1,740,127 bags on Wednesday, marking the lowest level in eight months.
Earlier this week, cocoa prices reached a 1.75-year low, influenced by pressure from European Union nations to delay the implementation of EU deforestation regulations for a year. This regulation, referred to as EUDR, seeks to combat deforestation in nations exporting key commodities like soy and cocoa to the EU. The anticipated postponement, expected at the end of December, may alleviate supply worries and enable EU countries to persist with imports from areas in Africa, Indonesia, and South America where deforestation is occurring.
There are also expectations for a significant cocoa harvest in West Africa, which is putting downward pressure on prices. Cocoa producers in Ivory Coast report that their cocoa trees are thriving, thanks to recent dry weather, which aids in the drying of beans. Similarly, farmers in Ghana noted that favorable weather conditions are accelerating the growth of their cocoa beans.
Mondelez, a chocolate maker, recently mentioned that the current cocoa crop from West Africa is 7% above the five-year average and significantly exceeds last year’s yield. Harvesting of the main crops in Ivory Coast has just started, and producers are optimistic about the quality.
Prices are also feeling the pinch after the Trump administration announced the removal of a 10% reciprocal tariff on imports, including cocoa, last Friday.
Weak global demand for cocoa is further contributing to the bearish trend in prices. On October 30, the CEO of Hershey expressed disappointment with Halloween chocolate sales this year, a significant period as it accounts for nearly 18% of annual U.S. candy sales—second only to Christmas. Additionally, the Asia Cocoa Association reported on October 17 that cacao milling volume in Asia fell by 17% year-on-year in the third quarter, reaching its lowest figure in nine years. The European Cocoa Association confirmed on October 16 that European cocoa crushing volumes fell by 4.8% year-on-year, also hitting a decade-low for the third quarter. Meanwhile, the National Confectionery Association noted a 3.2% year-over-year increase in North American cocoa milling volume to 112,784 tons for the third quarter, but adjustments in reporting contributed to this figure. In a related note, North American chocolate candy sales saw a more than 21% decline in the 13 weeks ending September 7 compared to the previous year, according to Circana data.
Interestingly, signs of a slowdown in cocoa exports from Ivory Coast, the leading cocoa producer, seem to provide some support for prices. The country has shipped 516,787 tons of cocoa from October 1 to November 16 in the current marketing year, which is a 5.7% drop from the 548,494 tons during the same period last year.
Moreover, declining cocoa production in Nigeria, the fifth-largest cocoa producing nation, is contributing to a positive price outlook. The Cocoa Association of Nigeria predicts that cocoa production for 2025/26 will be around 305,000 tons, an 11% decrease from the projected 344,000 tons for the 2024/25 crop year. Additionally, Nigeria reported cocoa exports for September at 14,511 tons, unchanged from the previous year.
On May 30, the International Cocoa Organization (ICCO) adjusted the global cocoa deficit for 2023/24 to -494,000 tons, the largest shortfall in over 60 years. ICCO indicates production for 2023/24 will be at 4.380 million metric tons, down 13.1% from last year. They also noted that the global cocoa stock-to-crushed ratio for 2023/24 has decreased to 27.0%, the lowest in 46 years. Looking ahead, ICCO predicts a global cocoa surplus of 142,000 tons in 2024/25, marking the first surplus in four years, with production projected to rise by 7.8% year-on-year to 4.84 million metric tons.
