Onome Amuge
Cocoa prices dropped on Friday as a stronger US dollar triggered long liquidation in futures markets, offsetting supply-side concerns from West Africa where adverse weather continues to cast uncertainty over the upcoming main harvest.
December New York cocoa closed down 1.43 per cent at $7,422 per tonne, while London futures fell 1.73 per cent to £5,100 per tonne. The pullback came a day after prices touched one-week highs on fears that heavy rains in Ivory Coast and dryness in neighbouring Ghana and Nigeria were complicating crop development.
“The dollar strength is an immediate headwind for commodities broadly, and cocoa is no exception. Funds had built up long positions on weather-related supply risks, so a firmer greenback offered the trigger for some profit-taking,” said Judy Ganes, president of J Ganes Consulting.
Weather across West Africa, which accounts for around 70 per cent of global cocoa supply, has turned increasingly erratic. In Ivory Coast, torrential downpours have hindered farmers’ access to fields and slowed transport of beans from plantations to ports, raising near-term logistical bottlenecks.
By contrast, in Ghana and Nigeria, persistent dryness has left cocoa pods vulnerable, with farmers warning of withering yields. Analysts say the combination underscores the precarious outlook as the new marketing season begins in October.
“The pod count looks favourable on paper, but the weather over the next six weeks will be decisive. Too much rain invites black pod disease, too little and pod retention suffers,” said Carlos Mera, head of agri commodities at Rabobank.
Mondelez cited data showing pod counts in West Africa running 7 per cent above the five-year average and materially higher than last year’s crop. That has fuelled some optimism among buyers and pressured prices earlier in the week, with New York cocoa dropping to one-and-a-half month lows on Tuesday.
Adding to the complexity, inventories remain historically constrained. ICE-monitored cocoa stocks in US ports fell to 2.09 million bags on Friday, a 4.25-month low.
Government data show shipments from the world’s top producer reached 1.81 million tonnes between October 1 and September 7, up 5.8 per cent year-on-year but down from the much larger 35 per cent increase recorded in December.
“Stocks are tight, and that provides a floor to prices even when speculative selling kicks in. The fundamental backdrop is not one of surplus — it’s more a question of how bad or manageable the shortfall will be,” said Stephen Yeboah, founder of commodities consultancy Commodity Monitor.
Offsetting supply jitters are growing concerns about demand destruction as persistently high cocoa costs squeeze chocolate makers. Lindt & Sprüngli cut its margin guidance in July after reporting a sharper-than-expected fall in first-half sales, while Barry Callebaut has lowered its sales outlook twice in three months.
The Swiss processor said volumes fell 9.5 per cent in the March-May quarter, its steepest drop in a decade, underscoring the extent to which elevated cocoa costs and tariffs are filtering down to consumers.
“Chocolate is proving less resilient to price hikes than many in the industry had hoped. We are starting to see real demand rationing,” said Erin FitzPatrick, soft commodities analyst at Rabobank.
Cocoa prices remain highly volatile, swinging between weather-driven supply fears and signs of weakening demand. Last month, futures rallied to two-month highs after the Commodity Weather Group warned that the past 60 days had been the driest since 1979 across West Africa’s cocoa belt. The drought raised alarms about reduced pod retention and an uptick in black pod disease — risks that remain in play despite recent rains.
For now, the stronger dollar and bearish demand signals have reasserted themselves. But analysts caution that as the main crop harvest approaches, weather developments in West Africa will once again dominate sentiment.
