Onome Amuge
Cocoa prices softened on Tuesday as improving weather conditions across West Africa bolstered expectations of stronger harvests and increased supplies.
Futures in New York fell 2 per cent to trade lower at the March contract, while the equivalent London contract slipped 1.7 per cent. The pullback follows a brief rally at the start of the week, when prices touched a two-week high after the International Cocoa Organization cut its forecast for the 2024/25 global surplus to 49,000 tonnes, down from a previous estimate of 142,000 tonnes. The ICCO also trimmed its outlook for global production to 4.69mn tonnes from 4.84mn tonnes.
Fresh reports from Ivory Coast and Ghana, the world’s two largest producers, indicated that a mix of rain and sunshine has supported pod development ahead of the dry harmattan season. Farmers in both countries indicated that growing conditions were favourable, contributing to expectations of more abundant output.
Still, the latest port-arrival data from Ivory Coast point to a slower start to the marketing year: shipments between October 1 and November 30 fell 2.1 per cent year on year to 718,451 tonnes. ICE-monitored stocks in US ports have also slipped to an eight-and-a-half-month low, lending some support to prices.
Market sentiment, however, remains weighed down by the prospect of ample global supply. Cocoa fell to a 20-month low in mid-November on optimism over a bumper West African crop, reinforced by producer and industry assessments. Mondelez, the global confectionery group, said recent pod counts were 7 per cent above the five-year average and materially stronger than last year’s readings.
Regulatory developments have also eased supply concerns. Last week, the European Parliament approved a one-year delay to the EU’s deforestation regulation, legislation that would have tightened import requirements for commodities including cocoa. The delay allows EU buyers to continue sourcing from regions where deforestation risks persist, such as parts of West Africa, Indonesia and South America.
The US market has added to the bearish backdrop, as the Trump administration this month scrapped reciprocal tariffs on commodities not grown domestically, including cocoa, and ended a 40 per cent levy on food imports from Brazil, one of the top 10 cocoa-producing countries.
Demand signals remain uneven. Hershey reported disappointing Halloween chocolate sales, a key period that accounts for nearly a fifth of annual US confectionery revenue. Industry data also show weakening grindings, a proxy for demand. Asia’s third-quarter grind fell 17 per cent year on year to a nine-year low, while Europe posted its weakest third-quarter grind in a decade. North America reported a small increase, though the figures were inflated by new participants in the survey; overall chocolate-candy sales volumes were down more than 21 per cent in the 13 weeks to September 7.
One counterweight to the otherwise bearish supply outlook is Nigeria, the world’s fifth-largest producer, where output is expected to decline. The country’s cocoa association forecasts production will fall 11 per cent in 2025/26 to 305,000 tonnes, following a projected 344,000 tonnes this season. September export volumes were unchanged year on year at 14,511 tonnes.
