Cocoa Prices Rebound on Adverse Weather in West Africa

Core Viewpoint - Cocoa prices have shown a recovery from 1.5-month lows due to weather concerns in West Africa, leading to short covering in cocoa futures [2] Price Movements - December ICE NY cocoa (CCZ25) increased by +161 (+2.23%) and December ICE London cocoa 7 (CAZ25) rose by +60 (+1.19%) [1] Supply and Demand Dynamics - Cocoa prices initially fell due to expectations of growing supplies amid weakening demand, with chocolate makers like Lindt & Sprüngli AG and Barry Callebaut AG lowering their sales volume guidance [3] - The European Cocoa Association reported a -7.2% year-on-year decline in Q2 European cocoa grindings, while the Cocoa Association of Asia noted a -16.3% year-on-year drop, indicating weak global demand [9] Weather Impact - Heavy rain in the Ivory Coast has hindered farmers from accessing cocoa fields, while dryness in Ghana and Nigeria has damaged crops [2] - The past 60 days have been the driest on record since 1979 for West Africa, affecting cocoa pod retention before the main harvest [5] Crop Estimates - The latest cocoa pod count in West Africa is 7% above the five-year average, indicating a potentially larger crop than last year [4] - The average estimate for this year's Ivory Coast mid-crop is 400,000 MT, down -9% from last year's 440,000 MT [7] - Nigeria's Cocoa Association projects an -11% year-on-year decline in cocoa production for the 2025/26 crop year [8] - Ghana's Cocoa Board anticipates an +8.3% year-on-year increase in cocoa production for the 2025/26 crop [10] Inventory Levels - ICE-monitored cocoa inventories in US ports have fallen to a 3.75-month low of 2,133,116 bags, which is supportive for prices [4] Global Cocoa Deficit - The International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 MT, the largest in over 60 years, with production down by 13.1% year-on-year [11]