Cocoa Prices Rise Amid Supply Concerns and Demand Risks

Cocoa prices have seen a rise with short-covering amid supply concerns. However, demand warnings from major chocolate makers Hershey and Mondelez add to the uncertainty. Investors need to be cautious about the mixed signals affecting cocoa stock performance.

Date: 20-03-2025

AI Rating: 5

Earnings Per Share (EPS): There is no mention of EPS in the report.

Revenue Growth: The report does not provide any specific information regarding revenue growth.

Net Income: No details regarding net income are mentioned in this analysis.

Profit Margins (Gross, Operating, Net): There is no data related to profit margins available in the text.

Free Cash Flow (FCF): The report does not discuss free cash flow.

Return on Equity (ROE): No information on return on equity is provided in the report.

The report indicates that cocoa prices are currently under pressure due to a forecast of improved supply and reduced demand. Specifically, the Ivory Coast's mid-crop forecast is lower compared to last year, which initially provided some support to prices.

However, the overall trend appears bearish as cocoa inventories are recovering and there is a forecasted global cocoa surplus for 2024/25. Reports show that cocoa grindings have decreased significantly, particularly in Europe and Asia, indicating declining demand due to high prices, which major chocolate manufacturers have noted as problematic.

Moreover, concerns about slowing cocoa exports from the Ivory Coast contrast with reports of increased exports from Nigeria, adding to the uncertainty in the market. The report also highlights a significant cocoa production deficit projected for the 2023/24 period, yet prices are at risk from high input costs affecting chocolate demand.

Overall, the cocoa market seems to be dealing with conflicting signals that could make investors take a cautious approach due to demand risks and changing supply dynamics.

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