Cocoa Prices Hit 4-Month Lows Amid Surplus Concerns

Cocoa prices have plummeted due to a global surplus forecast, marking 4-month lows as supply improves and demand weakens. Analysts highlight this trend may affect stocks of major chocolate companies.

Date: 15-03-2025

AI Rating: 4

**Cocoa Prices Decline Significantly**: The recent report indicates that cocoa prices have decreased sharply, with May ICE NY cocoa closing down -3.73% and May ICE London cocoa also dropping -4.08%. This bearish trend can be attributed to the outlook for a global surplus of cocoa. The International Cocoa Organization (ICCO) has recently forecasted a surplus of 142,000 MT for the 2024/25 period, marking the first surplus in four years and a projected +7.8% rise in production year-on-year to 4.84 MMT. **Inventory and Export Dynamics**: The recovery of cocoa inventories also contributes negatively to price stability. Inventories have surged from a previous 21-year low to a 3-3/4 month high. Additionally, Nigeria's cocoa exports have increased by 27% year-on-year, reinforcing the overall perspective of oversupply. **Demand Concerns**: Major chocolate manufacturers like Hershey and Mondelez have raised concerns about declining demand amidst rising cocoa prices. Execs from Mondelez indicated that high cocoa prices are straining consumer demand, especially in North America. This decline in demand was also reflected in the Q4 cocoa grinding data, which recorded significant decreases in grip in Europe, Asia, and North America—each hitting the lowest levels in more than four years. **Production Cuts From Ghana**: Despite the bearish sentiment surrounding cocoa prices, the cut in forecasted production from Ghana—down to 617,500 MT—may lend some support to prices. This adjustment was made for the second time this season, indicating potential continuing supply constraints. **Global Cocoa Deficit**: The ICCO reported a significant global cocoa deficit of -441,000 MT for the 2023/24 period, emphasizing that this is the largest deficit seen in over 60 years. Production has dropped -13.1% year-on-year, creating a low stocks-to-grindings ratio, further indicating constraints in the market in contrast to the surplus forecast for the following year.

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