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Cocoa Prices Rise Amid Demand Concerns and Tight Supply

Cocoa market sees price rise as concerns over demand persist. Executives from leading chocolate makers warn that high prices are hurting consumption, impacting overall cocoa demand.

Date: 
AI Rating:   5
Demand Issues
Demand for cocoa is waning, as highlighted by statements from executives at Hershey and Mondelez. Mondelez has indicated that high prices may lead to a slowdown in chocolate demand, particularly in North America, where cocoa consumption is decreasing.

Quarterly Performance Metrics
Recent quarterly grinding reports show a decline in cocoa demand. The European Cocoa Association reported a -5.3% year-on-year decline in Q4 European cocoa grindings. Similarly, the Cocoa Association of Asia noted a -0.5% year-on-year drop, with North American bean grindings also experiencing a -1.2% annual decrease.

Supply Factors
While there are concerns about slowing cocoa exports from the Ivory Coast, indicating a positive price pressure, cocoa inventories at U.S. ports have recently trended lower, hitting a 21-year low before a slight recovery.

Global Cocoa Deficits
According to the International Cocoa Association, the forecast for the global cocoa deficit has been raised, suggesting continued issues with supply. The production estimates have also been adjusted downward, indicating potential long-term challenges in maintaining adequate cocoa supplies.

Overall, the mixed signals from demand declines and supply tightness present a volatile landscape for cocoa prices in the near future.
Stocks:  HSY MDLZ