Cocoa Costs Rebound as ICE Inventories Dwindle

December ICE NY cocoa (CCZ25) on Wednesday closed up +42 (+0.70%), and December ICE London cocoa #7 (CAZ25) closed up +62 (+1.46%).

Cocoa costs recovered from 1-week lows on Wednesday and moved larger as ICE inventories proceed to shrink.  ICE-monitored cocoa inventories held in US ports fell to a 7-month low of 1,837,670 luggage on Wednesday.  Beneficial properties in London cocoa accelerated on Wednesday after the British pound (^GBPUSD) tumbled to a 2.75-month low.  The weaker pound boosts cocoa that’s priced when it comes to sterling.

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Cocoa costs on Wednesday initially fell to 1-week lows amid expectations of a world cocoa surplus pushed by favorable West African climate and harvests.  Climate forecaster Vaisala on Monday forecast scattered showers in southern Nigeria and Cameroon over the approaching days.

Chocolate maker Mondelez not too long ago stated that the newest cocoa pod rely in West Africa is 7% above the five-year common and “materially larger” than final yr’s crop.  The harvest of the Ivory Coast’s most important crop has simply begun, and farmers are optimistic about its high quality.

Cocoa costs are supported by a slowdown in cocoa exports from the Ivory Coast, the world’s largest cocoa producer.  Monday’s authorities knowledge confirmed that Ivory Coast farmers shipped 215,219 MT of cocoa to ports this new advertising and marketing yr, from October 1 by October 26, down -24% from 284,633 MT in the identical interval a yr in the past.

Weak world cocoa demand is bearish for costs.  The Cocoa Affiliation of Asia on October 17 reported that Q3 Asia cocoa grindings fell by -17% y/y to 183,413, the smallest grindings for a Q3 in 9 years.  The European Cocoa Affiliation on October 16 reported that Q3 European cocoa grindings fell -4.8% y/y to 337,353 MT, the bottom for a 3rd quarter in 10 years.  The Nationwide Confectioners Affiliation reported that Q3 North American coca grindings rose +3.2% y/y to 112,784 MT, however the addition of recent reporting corporations skewed the information.

Cocoa costs have been below stress over the previous two months amid fears that top cocoa costs and tariffs may dampen chocolate demand.  North American gross sales quantity of chocolate sweet was down greater than -21% within the 13 weeks ending September 7, in comparison with the identical interval final yr, in accordance with knowledge from analysis agency Circana.

Cocoa deliveries in Ghana have surged, weighing on costs.  Cocoa arrivals to ports in Ghana within the 4 weeks ending September 4 reached 50,440 MT in comparison with about 11,000 MT delivered in the identical interval in 2024.  Ghana is the world’s second-largest cocoa producer.

A supportive issue for cocoa is decrease cocoa manufacturing in Nigeria, the world’s fifth-largest cocoa producer.  Nigeria’s Cocoa Affiliation initiatives that Nigeria’s 2025/26 cocoa manufacturing will fall by -11% y/y to 305,000 MT from a projected 344,000 MT for the 2024/25 crop yr.  In associated information, Nigeria reported that its August cocoa exports rose +15% y/y to 17,239 MT.  

On Might 30, the Worldwide Cocoa Group (ICCO) revised its 2023/24 world cocoa deficit to -494,000 MT, the most important deficit in over 60 years.  ICCO stated 2023/24 cocoa manufacturing fell by -13.1% y/y to 4.380 MMT.  ICCO acknowledged that the 2023/24 world cocoa stocks-to-grindings ratio declined to a 46-year low of 27.0%.  For 2024/25, ICCO estimated a world cocoa surplus of 142,000 MT, marking the primary surplus in 4 years.  ICCO additionally stated world cocoa manufacturing in 2024/25 rose by +7.8% y/y to 4.84 MMT. 

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