December ICE NY cocoa (CCZ25) on Friday closed down -291 (-4.49%), and December ICE London cocoa #7 (CAZ25) closed down -225 (-4.99%).
Cocoa prices extended their plunge this week on Friday, with NY cocoa posting a 19-month low in its nearest futures and London cocoa reaching a 20-month low. Cocoa prices are selling off as this week’s actions by the governments of the Ivory Coast and Ghana to boost the amount they pay farmers for their cocoa beans may encourage sales and boost cocoa supplies.
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The outlook for abundant global cocoa supplies is hammering cocoa prices. Cocoa deliveries in Ghana, the world’s second-largest cocoa producer, have surged and are weighing on prices. Cocoa arrivals to ports in Ghana in the four weeks ending September 4 reached 50,440 MT compared to about 11,000 MT delivered in the same period in 2024.
Cocoa prices have also been under pressure over the past seven weeks amid fears that high cocoa prices and tariffs could dampen chocolate demand. Chocolate maker Lindt & Sprüngli AG lowered its margin guidance for the year in July due to a larger-than-expected decline in first-half chocolate sales. Additionally, chocolate maker Barry Callebaut AG reduced its sales volume guidance for a second time in three months in July, citing persistently high cocoa prices. The company projects a decline in full-year sales volume and reported a -9.5% drop in its sales volume for the March-May period, the biggest quarterly decline in a decade.
The outlook for an improved cocoa crop in the Ivory Coast this year is also bearish for prices. Chocolate maker Mondelez recently said that the latest cocoa pod count in West Africa is 7% above the five-year average and “materially higher” than last year’s crop. The harvest of the Ivory Coast’s main crop is expected to begin next month, and farmers are optimistic about the quality of the crop.
Cocoa has some support from a slowdown in the pace of cocoa exports from the Ivory Coast, the world’s largest cocoa producer. Monday’s government data showed that Ivory Coast farmers shipped 1.82 MMT of cocoa to ports this marketing year from October 1 to September 28, up +3.4% from last year but down sharply from the much larger +35% increase seen in December.
Tighter cocoa inventories are supportive for prices after ICE-monitored cocoa inventories held in US ports fell to a 5.25-month low of 1,941,368 bags on Friday.
Quality concerns regarding the Ivory Coast’s mid-crop cocoa are supportive of prices. 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 and ends in September. The average estimate for this year’s Ivory Coast mid-crop is 400,000 MT, down -9% from last year’s 440,000 MT.
Another supportive factor for cocoa is the smaller cocoa production in Nigeria, the world’s fifth-largest cocoa producer. Nigeria’s Cocoa Association projects Nigeria’s 2025/26 cocoa production will fall -11% y/y to 305,000 MT from a projected 344,000 MT for the 2024/25 crop year. In related news, Nigeria reported that its July cocoa exports fell -22% y/y to 13,579 MT.
Weakness in global cocoa demand has been a bearish factor for cocoa prices. The European Cocoa Association reported on July 17 that Q2 European cocoa grindings fell by -7.2% y/y to 331,762 MT, a bigger decline than expectations of -5% y/y. Also, the Cocoa Association of Asia reported that Q2 Asian cocoa grindings fell -16.3% y/y to 176,644 MT, the smallest amount for a Q2 in 8 years. North American Q2 cocoa grindings fell -2.8% y/y to 101,865 MT, which was a smaller decline than the declines seen in Asia and Europe.
Higher cocoa production by Ghana is bearish for cocoa prices. On July 1, 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.
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 by 13.1% y/y to 4.380 MMT. ICCO stated that the 2023/24 global cocoa stocks-to-grindings ratio declined to a 46-year low of 27.0%. Looking ahead to 2024/25, ICCO forecasted a global cocoa surplus of 142,000 MT on February 28, 2024, marking 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.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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