December ICE NY cocoa (CCZ24) today is down -69 (-0.79%), and December ICE London cocoa #7 (CAZ24) is up +51 (+0.73%).
Cocoa prices today are mixed, with London cocoa posting a 4-month high. NY cocoa today fell back from a 2-month high and turned lower after a rebound in the dollar (DXY00) sparked long liquidation in cocoa futures. However, London cocoa held its gains after the British pound (^GBPUSD) fell to a 4-1/2 month low. The weaker pound boosts cocoa that is priced in sterling.
Carryover support from Thursday is supporting cocoa prices after the European Parliament voted to change its deforestation regulations. If the EU cannot agree on changes to the rules before next month's deadline, the EU Deforestation Regulation will be implemented, which could curb supplies of commodities, including cocoa, from countries where deforestation occurs. The EU's Deforestation Regulation measure, known as EUDR, says companies must ensure the products they bring into the EU weren't made in areas deforested or degraded after 2020.
Cocoa prices have also risen sharply this week due to adverse weather in West Africa. Forecaster Maxar Technologies said parts of Ghana and Nigeria are experiencing dry and hot weather that could impact the cocoa mid-crop, which officially starts in April. Also, recent heavy rains in the Ivory Coast flooded fields, increasing disease risk and affecting crop quality. Recently harvested 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.
Shrinking global cocoa stockpiles are bullish for prices. ICE-monitored cocoa inventories held in US ports have been trending lower for the past 17 months and fell to a 19-year low Thursday of 1,667,279 bags.
Cocoa also has carryover support from last Thursday when CEO of Barry Callebaut, one of the world's largest chocolate producers, said that while cocoa crops in West Africa are showing "significant improvement versus last year," they are still not at levels seen in the 2022/23 season.
On the negative side is news that the pace of the Ivory Coast cocoa harvest is picking up, which is boosting supplies. Government data today showed that Ivory Coast farmers shipped 454,624 MT of cocoa to ports from October 1 to November 10, up +30% from 348,560 MT shipped the same time last year. The Ivory Coast is the world's largest cocoa producer.
Cocoa prices were undercut when 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, and its 2024/25 cocoa harvest begins in October.
An increase in cocoa production by Cameroon, the world's fifth-largest cocoa producer, is bearish for cocoa prices. On August 21, Cameroon's National Cocoa and Coffee Board reported that in 2023/24 (Aug/July), Cameroon cocoa production rose +1.2% y/y to 266,725. Also, Nigeria's August cocoa exports rose by +6.8% y/y to 14,984 MT. Nigeria is the world's sixth-largest cocoa producer.
In a bullish factor, the International Cocoa Association (ICCO) on August 30 raised its 2023/24 global cocoa deficit estimate to -462,000 MT from May's -439,000 MT, the largest deficit in over 60 years. ICCO also cut its 2023/24 cocoa production estimate to 4.330 MMT from May's 4.461 MMT. ICCO projected a 2023/24 global cocoa stocks/grindings ratio of a 46-year low of 27.4%.
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