Cocoa Prices Plunge Amid Demand Concerns and High Costs

Cocoa prices plummeting due to demand worries. Executives from Hershey and Mondelez highlight negative trends, warning of a potential slowdown in chocolate consumption.

Date: 25-02-2025

AI Rating: 4

Cocoa prices under siege: The report indicates a significant drop in cocoa prices, with March ICE NY cocoa falling 6.51% and London cocoa down 7.74%. This downward trend follows losses of over 11% in NY cocoa and 7.64% in London cocoa, suggesting persistent pressures on the prices.

Demand implications: The drop in cocoa prices is primarily driven by reduced demand forecasts. Executives from Mondelez and Hershey noted that high cocoa costs are detrimental to chocolate demand, with Mondelez specifically stating they expected a slowdown in chocolate consumption, particularly in North America. This is further supported by reports showing a decline in cocoa grindings across various regions, highlighting falling consumption.

Grindings data: The European Cocoa Association reported a yearly decline of 5.3% in Q4 European cocoa grindings, which are at their lowest in over four years. Similarly, Asian grindings fell by 0.5% and North American grindings decreased by 1.2%, indicating widespread reductions in demand.

External factors: While the report indicates concerns over slowing exports from the Ivory Coast, it also notes a slight increase in cocoa shipments this marketing year. Furthermore, tight global cocoa inventories are acknowledged as a bullish factor, with inventories at a 21-year low earlier but recovering slightly in the past months.

Global cocoa deficit: The ICCO's adjustment of the 2023/24 global cocoa deficit to 478,000 MT, and a reduced production estimate indicates potential price support in the future, as this is the largest deficit seen in over 60 years. This may contribute to stabilizing cocoa prices if demand begins to recover.

Stocks: HSY MDLZ