NY Cocoa Recovers Early Losses as ICE Inventories Fall

Core Viewpoint - Cocoa prices are experiencing mixed trends due to varying supply and demand dynamics, influenced by weather conditions in West Africa and inventory levels in the U.S. [2][4] Supply Factors - Recent rain in West Africa has eased dry conditions, potentially boosting cocoa output, while NY cocoa prices rose as U.S. port inventories fell to a 4.5-month low of 2,048,998 bags [2] - The Ivory Coast's cocoa exports have slowed, with shipments at 1.82 million metric tons (MMT) for the marketing year, a 5.8% increase from last year but down from a larger 35% increase seen in December [4] - Quality concerns regarding the Ivory Coast's mid-crop cocoa, attributed to late rain, are supporting prices, with the average estimate for this year's mid-crop at 400,000 MT, down 9% from last year's 440,000 MT [8] - Nigeria's cocoa production is projected to decline by 11% year-on-year to 305,000 MT for the 2025/26 crop year, which may support cocoa prices [9] Demand Factors - Weak global cocoa demand is negatively impacting prices, with European cocoa grindings down 7.2% year-on-year and Asian grindings down 16.3% year-on-year, marking the smallest Q2 in eight years [10] - Chocolate maker Lindt & Sprüngli AG lowered its margin guidance due to a larger-than-expected decline in first-half chocolate sales, while Barry Callebaut AG also reduced its sales volume guidance, projecting a decline in full-year sales volume [5] Market Outlook - The International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to 494,000 MT, the largest in over 60 years, while forecasting a global surplus of 142,000 MT for 2024/25, marking the first surplus in four years [12] - Ghana's cocoa production is expected to increase by 8.3% year-on-year to 650,000 MT for the 2025/26 crop year, which may exert downward pressure on cocoa prices [11]