Group 1: Cocoa Price Trends - Cocoa prices are currently down, with December ICE NY cocoa down -3.73% and December ICE London cocoa down -2.07% due to improved weather conditions in West Africa, which may enhance cocoa output [1] - Cocoa prices fell to 1.75-month lows amid expectations of growing supplies and weakening demand, influenced by high cocoa prices and tariffs affecting chocolate demand [4] - The International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 MT, the largest deficit in over 60 years, while forecasting a global cocoa surplus of 142,000 MT for 2024/25 [11] Group 2: Supply and Production Factors - The slowdown in cocoa exports from the Ivory Coast is bullish for prices, with shipments reported at 1.82 MMT, up +5.8% from last year but down from a larger +35% increase seen in December [3] - Quality concerns regarding the Ivory Coast's mid-crop cocoa are supportive of prices, with an estimated mid-crop of 400,000 MT, down -9% from last year's 440,000 MT [7] - Nigeria's Cocoa Association projects a decline in cocoa production by -11% y/y to 305,000 MT for the 2025/26 crop year, which may support prices [8] Group 3: Demand Dynamics - Weakness in global cocoa demand has been a bearish factor, with Q2 European cocoa grindings falling -7.2% y/y and Q2 Asian cocoa grindings down -16.3% y/y, the smallest amount for a Q2 in 8 years [9] - Chocolate makers like Lindt & Sprüngli AG and Barry Callebaut AG have lowered their sales volume guidance due to high cocoa prices, indicating a potential decline in chocolate demand [4] Group 4: Weather Impact - Recent rains in West Africa are easing dry conditions, which may promote flowering of cocoa trees and boost output, contributing to bearish price pressure [1] - The past 60 days have been the driest on record since 1979 for West Africa, impacting cocoa pod retention before the main crop harvest [6]

Cocoa Prices and Market Dynamics - Cocoa prices are currently rising, with December ICE NY cocoa up by 0.88% and December ICE London cocoa up by 1.45%, driven by weather concerns in West Africa [1] - Heavy rainfall in the Ivory Coast has hindered farmers' access to cocoa fields, while dryness in Ghana and Nigeria has negatively impacted crop health [1] - Tighter cocoa inventories in the US, which have fallen to a 3.75-month low of 2,123,868 bags, are also supporting price increases [3] Supply and Demand Factors - Cocoa prices had previously dropped to 1.5-month lows due to expectations of increased supply amid weakening demand, with notable declines in chocolate sales reported by major companies [4] - Optimism regarding this year's cocoa crop harvest in West Africa is present, with a cocoa pod count reported to be 7% above the five-year average [5] - The pace of cocoa exports from the Ivory Coast has slowed, with shipments reported at 1.81 million metric tons, a 5.8% increase from last year but lower than previous months [7] Quality and Production Concerns - Quality issues with the Ivory Coast's mid-crop cocoa, attributed to late rain, are contributing to price support, with an estimated mid-crop of 400,000 metric tons, down 9% from last year [8] - Nigeria's cocoa production is projected to decline by 11% year-on-year to 305,000 metric tons for the 2025/25 crop year, which may also support cocoa prices [9] Global Demand Trends - Weakness in global cocoa demand has been a bearish factor, with significant declines in cocoa grindings reported in Europe (-7.2%), Asia (-16.3%), and North America (-2.8%) [10] - Ghana's projected increase in cocoa production by 8.3% year-on-year to 650,000 metric tons for the 2025/26 crop year may exert downward pressure on cocoa prices [11] Global Cocoa Market Outlook - The International Cocoa Organization has revised its 2023/24 global cocoa deficit to 494,000 metric tons, the largest in over 60 years, while forecasting a surplus of 142,000 metric tons for 2024/25 [12]