Cocoa prices jumped a lot last year but are now dropping fast. Still, chocolate prices in stores are not going down anytime soon. Last year, cocoa futures almost tripled, forcing chocolate makers to raise prices. They are still using cocoa bought at those high prices. Some chocolate makers even changed their recipes to cut costs. These changes are not easy to reverse, so prices remain high. Experts say cheaper cocoa may only reach stores in the second half of next year, and it is not guaranteed. Jonathan P ...

Core Viewpoint - Cocoa prices have increased due to weather concerns in West Africa, impacting supply and quality, while global demand remains weak, creating a complex market environment [1][4][10]. Group 1: Price Movements - December ICE NY cocoa closed up +73 (+0.99%) and December ICE London cocoa closed up +68 (+1.33%) on Wednesday [1]. - Cocoa prices fell to 1.5-month lows on Tuesday due to expectations of growing supplies amid weakening demand [4]. Group 2: Supply Factors - Heavy rain in the Ivory Coast has hindered farmers' access to cocoa fields, reducing cocoa movement to ports [1]. - Tighter cocoa inventories in US ports fell to a 4-month low of 2,115,411 bags [3]. - The slowdown in cocoa exports from the Ivory Coast showed a shipment of 1.81 million metric tons (MMT) this marketing year, up +5.8% from last year but down from a larger +35% increase seen in December [7]. - Quality concerns regarding the Ivory Coast's mid-crop cocoa are supportive of prices, with an average estimate of 400,000 metric tons, down -9% from last year's 440,000 metric tons [8]. Group 3: Crop Conditions - Optimism about this year's cocoa crop harvest in West Africa is noted, with a cocoa pod count reported to be 7% above the five-year average [5]. - The past 60 days for West Africa cocoa were the driest on record since 1979, impacting cocoa pod retention before the main crop harvest [6]. - Nigeria's cocoa production is projected to fall -11% year-on-year to 305,000 metric tons for the 2025/26 crop year [9]. Group 4: Demand Dynamics - Weakness in global cocoa demand has been a bearish factor, with Q2 European cocoa grindings falling -7.2% year-on-year to 331,762 metric tons [10]. - The Cocoa Association of Asia reported a -16.3% year-on-year decline in Q2 cocoa grindings to 176,644 metric tons, the smallest amount for a Q2 in 8 years [10]. - Higher cocoa production by Ghana is seen as bearish for cocoa prices, with a projected increase of +8.3% year-on-year to 650,000 metric tons for the 2025/26 crop [11]. Group 5: Global Cocoa Deficit - The International Cocoa Organization revised its 2023/24 global cocoa deficit to -494,000 metric tons, the largest deficit in over 60 years [12]. - The 2023/24 global cocoa production is expected to fall by 13.1% year-on-year to 4.380 million metric tons [12].

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]