March ICE NY cocoa (CCH25) is up +84 (+0.72%), and March ICE London cocoa #7 (CAH25) is down -238 (-2.54%).
Cocoa prices remain volatile in thin holiday trade as they consolidate below recent highs. NY cocoa last Wednesday posted an all-time nearest-futures high, and London cocoa posted an 8-month nearest-futures high. Cocoa prices ran into long liquidation pressure over the past several sessions but stabilized today.
Cocoa prices were undercut Monday by news of continued high cocoa shipments by farmers in the Ivory Coast, the world's largest producer. Government data Monday showed that Ivory Coast farmers shipped 970,945 MT of cocoa to ports from October 1 to December 15, up +30% from 744,967 MT shipped the same time last year.
Cocoa prices rallied sharply in November and December on the deterioration of the West African cocoa mid-crop outlook. Maxar Technologies warned that dry conditions in West Africa will hurt the early development of the mid-year cocoa crop harvested in April and that the arrival of the seasonal Harmattan winds could worsen the situation.
On the bullish side, Ghana last Friday reduced its 2024/25 (Sep-Aug) cocoa harvest forecast by -5% due to weather concerns, which was the second downward revision for the season.
Shrinking global cocoa stockpiles are also bullish for prices. ICE-monitored cocoa inventories held in US ports have been trending lower for the past 1-1/2 years and fell to a 20-year low last Thursday of 1,386,781 bags.
In a bullish factor, the International Cocoa Association (ICCO) on November 22 raised its 2023/24 global cocoa deficit estimate to -478,000 MT from May's -462,000 MT, the largest deficit in over 60 years. ICCO also cut its 2023/24 cocoa production estimate to 4.380 MMT from May's 4.461 MMT, down -13.1% y/y. ICCO projected a 2023/24 global cocoa stocks/grindings ratio of 27.0%, a 46-year low.
Heavy rain in West Africa has led to reports of high mortality rates of cocoa buds on trees and pushed cocoa prices sharply higher. Heavy rain in the Ivory Coast has also flooded fields, increased disease risk, and affected crop quality. Recently harvested cocoa beans from the Ivory Coast signal lower quality, with counts of about 105 beans per 100 grams. The Ivory Coast cocoa regulator allows exporters to buy bean counts of 80 to 100 or slightly more for every 100 grams, with the best quality cocoa having the lower count.
Stronger cocoa exports from Nigeria, the world's sixth-largest producer, are bearish for prices. Nigeria's Oct cocoa exports rose +15% y/y to 20,508 MT.
On the negative side, the Ivory Coast regulator Le Conseil Cafe-Cacao on October 18 raised its Ivory Coast 2024/25 cocoa production estimate to a range of 2.1-2.2 MMT from a June forecast of 2.0 MMT.
Recent global cocoa demand news was mixed. The National Confectioners Association on October 17 reported that North American Q3 cocoa grindings rose +12% y/y to 109,264 MT. Also, the Cocoa Association of Asia reported that Q3 Asian cocoa grinding rose +2.6% y/y to 216,998 MT. However, the European Cocoa Association reported that European Q3 cocoa grindings fell -3.3% y/y to 354,335 MT.
Cocoa found support after Ghana's Cocoa Board (Cocobod) on August 20 cut its 2024/25 Ghana cocoa production estimate to 650,000 MT from a June forecast of 700,000 MT. Due to bad weather and crop disease, Ghana's 2023/24 coca harvest sank to a 23-year low of 425,000 MT. Ghana is the world's second-biggest cocoa producer.
