Onome Amuge
Cocoa prices retreated on Tuesday as improved weather in West Africa eased concerns about crop damage and raised expectations of higher output from the world’s top producing region.
December ICE New York cocoa futures fell 3.7 per cent to $7,365 a tonne, while London cocoa futures dropped 2.1 per cent to £5,103 a tonne. The pullback comes after prices touched a 1.5-week high on Monday amid fears that persistent dryness in Ghana and Nigeria was damaging yields.
Traders said fresh rainfall may encourage flowering of cocoa trees, potentially boosting production in the Ivory Coast and Ghana, which together account for more than 60 per cent of global supply. “The arrival of rain is a bearish development for the market as it reduces weather-related risk,” one analyst noted.
Underlying fundamentals remain mixed. Inventories monitored by ICE in US ports fell to a 4.5-month low of just over 2.08mn bags on Monday, lending some support to prices. Exports from Ivory Coast have also slowed, with government data showing farmers shipped 1.82mn tonnes so far this marketing year, up 5.8 per cent on last year but down sharply from the 35 per cent surge recorded in December.
Meanwhile, consumer demand concerns continue to weigh on sentiment. Leading chocolate makers have warned that persistently high cocoa prices and import tariffs are denting sales. Swiss chocolatier Lindt & Sprüngli cut its profit margin guidance in July after a steeper-than-expected drop in first-half sales, while Barry Callebaut reduced its volume outlook for a second time in three months, reporting a 9.5 per cent sales decline in the three months to May, its worst quarterly contraction in a decade.
Crop prospects in West Africa are also improving. Mondelez recently said pod counts in the region are running 7 per cent above the five-year average and significantly higher than last year. However, concerns linger over the quality of the Ivorian mid-crop, which Rabobank estimates at 400,000 tonnes this year, down 9 per cent from 2023. Nigeria, the world’s fifth-largest producer, is also expecting an 11 per cent decline in production to 305,000 tonnes in 2025/26.
Cocoa futures rallied to two-month highs in August as traders fretted over record dryness in West Africa, but the return of rains this month has tempered those concerns. Analysts caution that weather volatility, alongside fragile consumer demand, is likely to drive continued price swings in the months ahead.
