September ICE NY cocoa (CCU25) Monday closed up +99 (+1.22%), and September ICE London cocoa #7 (CAU25) closed down -66 (-1.20%)
Cocoa prices on Monday settled mixed, with London cocoa falling to an 8-month nearest-futures low. London cocoa prices retreated on Monday after several European Union (EU) member states requested that the European Commission delay the application of rules aimed at curbing global deforestation. These rules would have allowed EU countries to continue importing cocoa supplies from countries, including Brazil and the Ivory Coast, where allegations of deforestation persist.
NY cocoa recovered from a 2.5-month low Monday and moved sharply higher as signs of a slowdown in Ivory Coast cocoa exports sparked short covering in cocoa futures. Monday’s government data showed that Ivory Coast farmers shipped 1.71 MMT of cocoa to ports this marketing year from October 1 to July 6, up +6.2% from last year but down from the much larger +35% increase seen in December. There are reports that heavy rain in the Ivory Coast is keeping cocoa growers off their farms and is disrupting the ongoing mid-crop cocoa harvest.
Cocoa prices have sold off over the past month on signs of higher global cocoa production. Last Tuesday, the Ghana Cocoa Board projected the 2025/26 Ghana cocoa crop would increase by +8.3% y/y to 650,000 from 600,000 MT in 2024/25. Ghana is the world’s second-largest cocoa producer.
In a bearish factor, ICE-monitored cocoa inventories held in US ports climbed to a 10-month high of 2,363,861 bags on June 18 and were modestly below that high at 2,286,458 bags as of Monday.
In a bearish report released on June 25, Nigerian May cocoa exports fell by -29% y/y to 14,110 MT. Nigeria is the world’s fourth-largest exporter of cocoa.
Cocoa prices have support from quality concerns regarding the Ivory Coast’s mid-crop cocoa, which is currently being harvested through September. Cocoa processors are complaining about the quality of the crop and have rejected truckloads of Ivory Coast cocoa beans. Processors reported that about 5% to 6% of the mid-crop cocoa in each truckload is of poor quality, compared with 1% during the main crop. According to Rabobank, the poor quality of the Ivory Coast’s mid-crop is partly attributed to late-arriving rain in the region, which limited crop growth. The mid-crop is the smaller of the two annual cocoa harvests, which typically starts in April. The average estimate for this year’s Ivory Coast mid-crop is 400,000 MT, down -9% from last year’s 440,000 MT.
Concern about consumer demand for cocoa and cocoa products is bearish for cocoa, driven by fears that tariffs will exacerbate already high cocoa prices. On April 10, Barry Callebaut AG, one of the world’s largest chocolate makers, reduced its annual sales guidance due to high cocoa prices and tariff uncertainty. Also, chocolate maker Hershey Co. recently reported that Q1 sales fell by 14% and said it anticipated $15-$20 million in tariff costs in Q2, which will boost chocolate prices and further weigh on consumer demand. Mondelez International reported weaker-than-expected Q1 sales, stating that consumers are cutting back on snack purchases due to economic uncertainty and high chocolate prices.
Weaker demand from cocoa processors was seen in Q1. Q1 North American cocoa grindings fell -2.5% y/y to 110,278 MT. Q1 European cocoa grindings fell -3.7% y/y to 353,522 MT. Q1 Asian cocoa grinding fell -3.4% y/y to 213,898 MT.
On May 30, the International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 MT from a February estimate of -441,000 MT, the largest deficit in over 60 years. ICCO said 2023/24 cocoa production fell -13.1% y/y to 4.380 MMT. ICCO said the 2023/24 global cocoa stocks/grindings ratio fell to a 46-year low of 27.0%. Looking ahead to 2024/25, ICCO on February 28 forecasted a global cocoa surplus of 142,000 MT for 2024/25, the first surplus in four years. ICCO also projected that 2024/25 global cocoa production will rise +7.8% y/y to 4.84 MMT.
