Cocoa Prices Supported by Weather Risks in West Africa

Core Viewpoint - Cocoa prices are experiencing upward movement due to weather-related concerns in West Africa, impacting supply and inventory levels [1][3][4]. Group 1: Price Movements - December ICE NY cocoa prices increased by +1.16% to $87, while December ICE London cocoa prices rose by +0.29% to $15 [1]. - Cocoa prices fell to 1.5-month lows recently due to expectations of growing supplies amid weakening demand [4]. Group 2: Supply and Inventory Factors - Cocoa inventories monitored by ICE in US ports have decreased to a 4-month low of 2,115,411 bags [3]. - The Ivory Coast's cocoa exports for the current marketing year are at 1.81 million metric tons (MMT), reflecting a +5.8% increase from last year but a decrease from a previous +35% increase [3]. Group 3: Weather and Crop Conditions - Heavy rains in the Ivory Coast have hindered farmers' access to cocoa fields, while dryness in Ghana and Nigeria has negatively affected crop health [1][5]. - The latest cocoa pod count in West Africa is reported to be 7% above the five-year average, indicating a potentially larger crop than last year [5]. Group 4: Quality and Production Concerns - The quality of the Ivory Coast's mid-crop cocoa is reportedly poor due to late rains, with an estimated production of 400,000 MT, down -9% from last year's 440,000 MT [7]. - Nigeria's cocoa production is projected to decline by -11% year-on-year to 305,000 MT for the 2025/26 crop year [8]. Group 5: Demand Trends - Weak global cocoa demand has been a bearish factor, with European cocoa grindings down -7.2% year-on-year and Asian grindings down -16.3% year-on-year [9]. - Higher cocoa production in Ghana is expected to exert downward pressure on cocoa prices, with a projected increase of +8.3% year-on-year for the 2025/26 crop [10]. Group 6: Global Cocoa Deficit and Future Projections - 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 13.1% year-on-year [11]. - ICCO forecasts a global cocoa surplus of 142,000 MT for 2024/25, marking the first surplus in four years, with production expected to rise by +7.8% year-on-year [11].