Cocoa Market Update
On Thursday, cocoa prices saw a bit of a rebound after earlier losses, with December ICE NY Cocoa (CCZ25) settling up by 14 points, which is a 0.23% increase. Meanwhile, December ICE London Cocoa #7 (CAZ25) ended the day up by 19 points, representing a 0.44% rise.
This shift in cocoa prices came about as a result of declining cocoa inventories reported by ICE, which prompted some traders to engage in short covering. The stockpile of cocoa recorded at U.S. ports dropped to 1,819,808 bags, marking a seven-month low. Additionally, the cocoa market in London benefited from a weaker British pound, which fell to a six-and-a-half-month low, thus increasing cacao prices that are denominated in pounds.
Interestingly, the initial drop in cocoa prices earlier in the day stemmed from concerns regarding demand. Hershey’s CEO expressed disappointment over chocolate sales during the Halloween season, which is significant since Halloween contributes around 18% to annual U.S. candy sales, trailing only Christmas.
In a more optimistic note, Mondelez reported that the cocoa crop from West Africa appears to be 7% higher than the five-year average and much better than last year’s yield. The harvest season has just begun in the Ivory Coast, and farmers are hopeful about the crop’s quality.
However, cocoa prices are still facing downward pressure due to a slowdown in exports from the Ivory Coast, the top cocoa producer globally. Data indicated that shipments from the Ivory Coast fell to 215,219 tonnes between October 1 and October 26 this marketing year, down 24% compared to the same period last year.
Global demand for cocoa is also weak, as reported by the Asia Cocoa Association. They noted that Asia’s cocoa milling volume dropped by 17% year-on-year in the third quarter, reaching its lowest point in nine years. Furthermore, the European Cocoa Association reported a 4.8% decrease in cocoa crushing volumes for the same period, marking a decade low. Although North America’s cocoa milling rose by 3.2%, this increase is somewhat skewed due to changes in reporting companies.
Prices have been negatively impacted over the past couple of months, driven by rising costs and concerns that tariffs may lessen chocolate demand. Recent data showed that chocolate candy sales in North America fell more than 21% within a 13-week period ending September 7 compared to last year.
On the supply side, Ghana’s cocoa shipments have surged – in the four weeks leading up to September 4, around 50,440 tonnes were delivered to ports, a stark contrast to just 11,000 tonnes during the same timeframe last year, as Ghana remains the second-largest cocoa producer worldwide.
Meanwhile, cocoa production in Nigeria, the fifth-largest producer, is declining. The Cocoa Association of Nigeria estimates that production for the 2025/26 crop year will reach 305,000 tonnes, which is an 11% reduction from the projected 344,000 tonnes for this year. Notably, Nigeria’s cocoa exports rose by 15% year-on-year to 17,239 tonnes in August.
In a broader view, the International Cocoa Organization (ICCO) recently adjusted its forecast for the global cocoa deficit for the 2023/24 season to -494,000 tonnes, the largest gap observed in over 60 years. The ICCO noted that cocoa production is set to decrease by 13.1%, totaling 4.380 million metric tonnes. Additionally, the global cocoa stock-to-crushed ratio has dropped to 27%, the lowest in 46 years, although the ICCO anticipates a surplus of 142,000 tonnes for the 2024/25 period, which would represent the first surplus in four years, with production expected to increase by 7.8% to 4.84 million metric tonnes.
