Cocoa Prices Rise Amid Supply Updates

On Friday, March ICE NY Cocoa closed up 210 points, marking a 3.83% increase, while March ICE London Cocoa #7 rose by 98 points, or 2.48%.

Prices for cocoa climbed to a three-week high in New York, fueled by the expectation that the global cocoa surplus will not be as large as previously thought. The International Cocoa Organization (ICCO) recently revised its 2024/25 surplus estimate down to 49,000 tonnes, compared to an earlier prediction of 142,000 tonnes. They also cut global production forecasts for the same period to 4.69 million metric tonnes (MMT) from 4.84 MMT.

A drop in cocoa stocks monitored by ICE is also pushing prices up. The current stockpile at U.S. ports has decreased to 1,681,896 bags—this is the lowest level in over eight months.

Additionally, cocoa shipments from Ivory Coast are down 2.1% compared to last year for the same time frame. Farmers shipped 718,451 tonnes from the start of October to the end of November, following government data released on Monday. Ivory Coast is known as the world’s leading cocoa producer.

On the other hand, the situation looks somewhat bearish in West Africa, with weather patterns appearing favorable for cocoa yields. Farmers in Ivory Coast have reported that a mix of rain and sunshine is aiding the flowering of cocoa plants, while those in Ghana noted that steady rainfall helps the growth of new cocoa pods.

However, concerns about potential over-supply are haunting the market. On November 19, cocoa prices dropped to a 1.75-year low, largely due to expectations of a bumper crop in West Africa. Farmers in Ivory Coast mentioned that their trees are thriving, aided by the recent dry spells that helped the beans dry effectively. Ghanaian farmers echoed this sentiment, observing that good weather has been accelerating the growth of their cocoa beans.

In some recent news, chocolate maker Mondelez revealed that West Africa’s latest cocoa harvest is approximately 7% above the five-year average and considerably higher than last year’s yield. Harvesting for main crops in Ivory Coast has just begun, stirring optimism among farmers about the quality of the produce.

The situation is further complicated by European regulations. Last Wednesday, the European Parliament approved a one-year extension of existing deforestation laws, which are putting pressure on cocoa prices. The EU’s EUDR aims to combat deforestation practices in countries exporting key commodities like cocoa and soy into the EU, a move that postpones further restrictions for now.

A previous announcement on November 14 by the Trump administration, about eliminating a 10% tariff on non-U.S. goods, including cocoa, added to the price fluctuations. They also lifted a 40% tariff on food imports from Brazil, a significant cocoa producer.

Weak global demand seems to be putting additional downward pressure on cocoa prices. Hershey’s CEO mentioned that chocolate sales during the Halloween season were notably “disappointing.” This holiday typically accounts for a significant portion of annual candy sales. Meanwhile, the Asia Cocoa Association found that cacao milling volume in Asia dropped 17% year-on-year during the third quarter, hitting a nine-year low, while the European Cocoa Association reported a 4.8% decrease in cocoa crushing in Europe for the same period, the lowest for a decade. In North America, though cocoa milling saw a slight uptick, overall chocolate candy sales dropped over 21% in recent weeks compared to last year.

There’s also a notable decline in cocoa production from Nigeria, the fifth largest producer globally. The Cocoa Association of Nigeria has projected a drop in production for the 2025/26 crop year. Nigeria reported flat cocoa exports year-on-year in September.

In a major update, the ICCO has adjusted its 2023/24 global cocoa deficit estimate to 494,000 tonnes, marking the largest deficit in over 60 years, attributing a 12.9% fall in production from last year. For 2024/25, the ICCO estimates a return to surplus, noting that global production will rise by 7.4% from the previous year.