December ICE NY cocoa (CCZ25) today is up +61 (+0.97%), and December ICE London cocoa #7 (CAZ25) is down -7 (-0.15%).
Cocoa prices are mixed today, with NY cocoa posting a 2.5-week high and London cocoa falling from a 3-week high.
Supply concerns are supportive for cocoa prices after the EU proposed only a six-month delay for enforcing its deforestation laws on Tuesday, rather than the previously announced one-year timeframe. The deforestation laws would require traceability requirements for farm products, including cocoa, produced in countries where forests are cut down for farming, potentially tightening supplies as farm products from these countries would not be allowed into the EU.
However, demand concerns knocked London cocoa prices lower today as last week's Q3 European grinding figures showed European Q3 cocoa demand fell to its lowest level in 10 years.
Tighter cocoa inventories are supportive for prices after ICE-monitored cocoa inventories held in US ports fell to a 6.5-month low of 1,854,690 bags on Wednesday.
An excessively short position by commodity funds in London cocoa futures could exacerbate any short-covering rally. Funds boosted their net-short positions in London cocoa by 2,286 to 13,057 in the week ended October 14, the largest short position in more than three years, according to the weekly Commitment of Traders (COT) data released last Friday. The US government shutdown has delayed the release of figures for NY cocoa positioning.
Signs of a slowdown in the pace of cocoa exports from the Ivory Coast, the world's largest cocoa producer, are also supportive for prices. Monday's government data showed that Ivory Coast farmers shipped 133,209 MT of cocoa to ports this new marketing year from October 1 through October 19, down -31% compared with 192,804 MT in the same period a year ago.
Weak global cocoa demand is bearish for prices. Last Friday, the Cocoa Association of Asia reported that Q3 Asia cocoa grindings fell -17% y/y to 183,413, the smallest grindings for a Q3 in 9 years. Also, last Thursday, the European Cocoa Association reported that Q3 European cocoa grindings fell -4.8% y/y to 337,353 MT, the lowest for a third quarter in 10 years. The National Confectioners Association reported that Q3 North American coca grindings rose +3.2% y/y to 112,784 MT, but the addition of new reporting companies skewed the data.
Cocoa prices have been under pressure over the past two months amid fears that high cocoa prices and tariffs could dampen chocolate demand. North American sales volume of chocolate candy was down more than -21% in the 13 weeks ending September 7, compared to the same period last year, according to data from research firm Circana.
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 has just begun, and farmers are optimistic about the quality of the crop.
Cocoa deliveries in Ghana have surged, 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. Ghana is the world's second-largest producer of cocoa.
A supportive factor for cocoa is the smaller cocoa production in Nigeria, the world's fifth-largest cocoa producer. Nigeria's Cocoa Association projects that Nigeria's 2025/26 cocoa production will fall by -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 August cocoa exports rose +15% y/y to 17,239 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 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.
