Cocoa Prices Mixed Amid Inventory Recovery and Demand Concerns

Cocoa market experiences mixed pricing as Nigerian exports rise and UK pound weaknesses influence London cocoa. Current inventory levels and demand forecasts show complexities affecting future pricing trends.

Date: 30-04-2025

AI Rating: 6

Cocoa Market Overview
Cocoa prices on July ICE showed a mixed performance, with New York cocoa declining by 0.57% while London cocoa increased by 0.43%. The fluctuation in prices can be attributed to various factors including recent export reports and inventory levels, markedly influencing market dynamics and investor sentiment.

Notably, a 24% year-over-year increase in Nigerian cocoa exports adds supply pressure, likely driving down prices in the near term. As Nigeria is the fifth-largest cocoa producer globally, such increases will impact supply chains and prices depending on demand fulfillment. Moreover, the rebound in ICE-monitored cocoa inventories from a 21-year low to a 6.5-month high further exacerbates bearish market sentiment, indicating ample supply against uncertain demand.

Demand Forecasts and Market Influence
Demand remains a mixed bag; cocoa grindings in North America, Europe, and Asia all recorded lesser declines than anticipated, which could hint at stronger-than-expected demand resilience. Although the first-quarter grindings fell -2.5%, -3.7%, and -3.4% respectively, these figures exceeded projections for sharper declines of -5%. This could suggest optimism for future demand in light of historical trends.

However, the market faces serious challenges. Concerns regarding the upcoming mid-crop yield in the Ivory Coast, primarily driven by adverse weather conditions, could create additional upward pressure on prices if inventories draw down faster than expected in conjunction with a projected overall surplus in global cocoa supplies for 2024/25. The projected cocoa surplus underscores potential long-term vulnerabilities, especially amid heightened trade tensions.

Global Pricing Outlook
Overall, the International Cocoa Organization's forecast for a surplus coupled with higher expected production could mitigate bullish price movements moving forward. Ratings on various market conditions would likely trend towards the neutral to slightly positive range. Investors paying attention to the volatility of cocoa-related investments should weigh these multifaceted factors as future price trajectories unfold.

Stocks: HSY COCO CHoc DBI