Cocoa Prices Drop Amid Mixed Supply Outlook

Cocoa prices are down as rains improve soil but concern about exports looms. Beneficial weather boosts crops, yet exports from the Ivory Coast are slowing, potentially affecting market stability.

Date: 05-02-2025

AI Rating: 5

Overview of Cocoa Prices
Current cocoa prices are showing a decrease, with March ICE NY cocoa down by -0.92% and March ICE London cocoa down by -1.08%. These declines are softened by beneficial rains in West Africa that have impacted cocoa tree development positively.

Cocoa Supply and Demand Dynamics
Despite the rainfall, there are concerns regarding slowing cocoa exports from the Ivory Coast. Government data indicates that the Ivory Coast farmers have shipped 1.29 MMT of cocoa, marking a rise of over 22% compared to last year, yet this is a decrease from the previous month’s 35% increase.

Global Cocoa Deficits
The global cocoa deficit is a point of concern, as recent reports indicate a sharp reduction in global cocoa stockpiles, dropping by 36% year-on-year to an estimated 1.041 MMT for the end of the 2023/24 season. This points toward a potentially widening deficit, which could influence cocoa prices upward.

Impact of High Prices on Demand
There are also bearish signals including demand destruction due to high cocoa prices. Q4 grindings have decreased significantly in Europe, Asia, and North America, suggesting a potential cooling in cocoa consumption.

Production Estimates Revision
An increase in Ivory Coast's production estimate for 2024/25 juxtaposed with Ghana’s declining cocoa production projections creates uncertainty. Ghana's production hit a 23-year low, affecting global supply forecasting.

Investor Outlook
The combination of improved weather conditions and potential growth in output has been mitigated by the risk of slowing exports and diminishing demand pressure, suggesting a complex interplay that investors should monitor closely.

Stocks: HSY