Cocoa prices reached a pivotal moment in trading, with the July ICE NY cocoa and July ICE London cocoa experiencing notable increases, closing at $10,283 per metric ton and $6,900 per metric ton respectively. This rally, which marked another significant week for cocoa, has been largely attributed to a slowdown in cocoa exports from the Ivory Coast, signaling potential tighter supplies in the near future. Data released by the Ivorian government indicated farmers exported 1.6 million metric tons of cocoa from October 1 to June 1, reflecting a 6.7% increase compared to the previous year. However, this falls short of the remarkable 35% increase witnessed in December.
Recent agricultural trends have been shaping cocoa markets, especially as weather conditions in West Africa come under scrutiny. Notably, while there has been some rainfall in the region, persistent drought conditions still affect over a third of both Ghana and the Ivory Coast, as outlined by the African Flood and Drought Monitor. The quality of the current mid-crop is further complicating supply forecasts, with cocoa processors raising alarms over the standard of the produce being harvested through September. Reports indicate that up to 6% of the mid-crop cocoa is deemed poor quality—significantly higher than the mere 1% during the principal harvest season. Rabobank analysts attribute this decline in quality partially to late-arriving rains, which have adversely affected crop growth. For the mid-crop, which is the smaller of two annual harvests typically beginning in April, estimates for this year stand at around 400,000 metric tons, representing a 9% downturn from last year’s output.
Although current cocoa inventories showed a rebound from the historic lows recorded earlier this year—with ICE-monitored cocoa stockpiles in U.S. ports increasing to 2.24 million bags—a potential oversupply might exert downward pressure on prices. From a low of 1.26 million bags in January, inventory levels reached their highest in over eight months, suggesting a complex landscape for cocoa pricing going forward.
Compounding these dynamics are concerns regarding consumer demand for cocoa and cocoa products. The apprehension surrounding impending tariffs could further strain already elevated cocoa prices. Earlier this year, Barry Callebaut AG, a major player in the chocolate production sector, revised its annual sales forecast downward, citing high cocoa prices coupled with continuing tariff uncertainty. Hershey Co. reported a 14% decline in first-quarter sales amid expectations of $15-$20 million in tariff-related expenses, anticipating that such costs would necessitate price increases on its chocolate products, potentially further dampening consumer demand. Mondelez International also echoed these concerns, disclosing weaker-than-anticipated first-quarter sales attributed to shifts in consumer behavior as economic uncertainties loom along with rising chocolate prices.
Despite these apprehensions, there are signs of resilience in global cocoa demand. Recent figures indicated that North American cocoa grindings in the first quarter dropped 2.5% year-on-year to 110,278 metric tons, yet this was less severe than expectations forecasting a 5% decline. Similarly, European and Asian cocoa grindings mirrored this trend, exhibiting smaller-than-anticipated drops of 3.7% and 3.4% respectively.
The challenges faced by Ghana, the world’s second-largest cocoa producer, have raised additional concerns for market analysts. The Ghanaian cocoa regulator, Cocobod, has twice lowered its harvest forecast for the 2024/25 season, revising it down from an initial estimate of 650,000 metric tons to 617,500 metric tons—a 5% decrease. These factors, combined with the International Cocoa Organization’s (ICCO) revised projections, indicate a growing global cocoa deficit for the 2023/24 production year. The ICCO now estimates a deficit of 494,000 metric tons, the largest seen in over six decades. Furthermore, they report a 13.1% year-on-year reduction in 2023/24 cocoa production, which is expected to total 4.38 million metric tons.
Looking ahead, some observers note that a forecasted global cocoa surplus for 2024/25—predicted to be approximately 142,000 metric tons—is a potential turning point, marking the first surplus in four years. The ICCO anticipates a rebound in production of 7.8% year-on-year, estimating total output for that period to reach 4.84 million metric tons.
As cocoa prices traverse through this complex interplay of supply constraints, quality concerns, and shifting consumer demand, stakeholders across the agricultural sector will be closely monitoring market signals to better navigate the uncertainties ahead. With economic conditions fluctuating, the cocoa industry remains poised at a critical juncture, as both producers and consumers adapt to the changing landscape characterized by evolving market dynamics.