Onome Amuge
Cocoa prices slipped on Thursday as investors weighed concerns that soaring costs and trade tariffs could erode chocolate demand, offsetting supply-side risks in West Africa that had recently buoyed the market.
December ICE New York cocoa settled 0.43 per cent lower at $7,938 per metric tonne, while September ICE London cocoa dropped 1.29 per cent to £5,354. The pullback comes after the commodity rallied to two-month highs earlier this month on weather worries in the world’s top producing nations.
Traders said consumer demand remained the key drag on sentiment. Swiss chocolate maker Lindt & Sprüngli cut its margin guidance in July after first-half chocolate sales fell more sharply than expected, while Barry Callebaut, the world’s largest supplier of bulk chocolate, has twice lowered its sales volume guidance in the past three months. The Zurich-based group reported a 9.5 per cent drop in sales between March and May, its heaviest quarterly decline in a decade.
“Chocolate demand is really where the pressure lies. Even premium manufacturers are struggling to pass on the full extent of raw material costs, and the consumer is trading down,” ” said a London-based commodities trader. “
Still, the downside for cocoa prices was limited by tighter inventories. ICE-monitored stockpiles in U.S. ports fell to a 3.25-month low of 2.16mn bags on Thursday, suggesting constrained near-term supply.
The longer-term supply picture remains precarious. Cocoa futures rallied earlier in August after meteorologists warned that cold, dry conditions in West Africa could undermine crop development. According to the Commodity Weather Group, the 30 days to August 15 were the driest period for Ivory Coast in 46 years. The lack of rainfall is raising the risk of black pod disease in Ghana and Nigeria and threatens pod retention ahead of the October main crop harvest.
Ivory Coast government data showed farmers had shipped 1.79 million metric tonnes of cocoa to ports so far this marketing year, up 5.9 per cent on the year. But the pace of shipments has slowed markedly compared with a 35 per cent increase seen in December.
Traders also flagged deteriorating bean quality in the country’s smaller mid-crop, harvested between April and September. Processors report rejecting truckloads of beans, with 5-6 per cent of mid-crop cocoa deemed poor quality, compared with just 1 per cent during the main harvest. Analysts at Rabobank said late-arriving rain had hampered growth and estimated the mid-crop at 400,000 tonnes, down 9 per cent from last year.
Elsewhere, Nigeria, the world’s fifth-largest cocoa grower, is facing a decline in output. The Cocoa Association of Nigeria projects production will fall 11 per cent year-on-year in 2025/26 to 305,000 tonnes, compared with an estimated 344,000 tonnes in the previous season. Export volumes edged up 0.9 per cent in June to 14,597 tons, but traders cautioned that declining harvests would eventually feed into the global supply shortfall.
