Onome Amuge
Cocoa prices extended their gains on Thursday, buoyed by fresh concerns over weather conditions in West Africa that threaten supplies from the world’s top producers, even as chocolate makers continue to warn that record-high prices are eroding demand.
December New York cocoa futures rose 1.16 per cent to $7,597 a metric tonne, while London contracts gained 0.29 per cent to £5,200. The move marked the second consecutive day of increases after futures touched six-week lows earlier this week.
Analysts said a combination of heavy rainfall in Ivory Coast, the world’s largest cocoa grower, and persistent dryness in Ghana and Nigeria has raised the risk of crop damage heading into the main harvest season that begins in October.
In Ivory Coast, heavy rains have hampered logistics, preventing farmers from transporting beans to export hubs. The government reported that cumulative deliveries to ports reached 1.81m tonnes from October to early September, 5.8 per cent higher than last year but well below the 35 per cent surge seen in December.
Meanwhile, in Ghana and Nigeria, rainfall deficits have caused pods to shrivel on trees, raising the risk of smaller yields and weaker quality beans. The Commodity Weather Group recently warned that the past 60 days were the driest across West Africa since 1979, conditions that could exacerbate black pod disease and reduce pod retention ahead of the key October-to-March main crop.
Nigeria’s Cocoa Association this week projected that national output could fall 11 per cent year-on-year in the 2025/26 season, to 305,000 tonnes. That would mark a sharp reversal from the 344,000 tonnes anticipated for the current crop year.
At the same time, ICE-monitored inventories in US ports fell to a four-month low of 2.1m bags, underscoring the tightening supply picture.
“The market is walking a tightrope between short-term demand weakness and long-term supply uncertainty,” said Carsten Fritsch, commodities analyst at Commerzbank.
Despite the weather-driven rally, cocoa’s advance remains capped by persistent signs of demand erosion. Major chocolate makers have sounded increasingly cautious in recent months, pointing to consumers trading down or cutting back altogether as confectionery prices rise.
Swiss group Lindt & Sprüngli in July lowered its margin guidance after reporting a steeper-than-expected drop in first-half chocolate sales. Barry Callebaut, one of the world’s largest cocoa processors, has reduced its sales volume guidance twice in three months, citing persistently high cocoa prices. The Zurich-based group reported a 9.5 per cent sales volume drop in the March-to-May quarter, its heaviest decline in a decade.
Even Mondelez, owner of Cadbury and Toblerone, noted last week that pod counts in West Africa were 7 per cent above the five-year average and “materially higher” than last year, a sign that output may yet surprise to the upside despite recent weather stress.
“Producers are caught in a squeeze. While weather-related disruptions are supportive for prices, the downstream effects are already forcing chocolate makers to raise prices, cut margins, or both — and that raises questions about how sustainable demand will be at these levels,” said Rabobank in a recent note.
Adding to the complexity is the poor quality of Ivory Coast’s mid-crop, harvested from April through September. Late-arriving rains hindered development, with Rabobank estimating the crop at 400,000 tonnes this year, down 9 per cent from 440,000 tonnes in 2023. Traders say beans from the mid-crop have been smaller and of lower quality, reducing their attractiveness for exporters.
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