September ICE NY cocoa (CCU25) on Thursday closed down -124 (-1.51%), and September ICE London cocoa #7 (CAU25) closed down -104 (-1.88%)

Cocoa costs on Thursday prolonged this week’s selloff, with NY cocoa posting a 2.5-month low and London cocoa posting a 7.5-month low.

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Cocoa costs have been weighed down by destructive carryover from Tuesday, when the Ghana Cocoa Board projected the 2025/26 Ghana cocoa crop would enhance by +8.3% y/y to 650,000 from 600,000 MT in 2024/25.  Ghana is the world’s second-largest cocoa producer.  

In a bearish issue, ICE-monitored cocoa inventories held in US ports climbed to a 9.75-month excessive of two,363,861 baggage on June 18 and have been simply mildly under that prime at 2,333,683 as of Thursday.

Cocoa costs have help from issues about tighter cocoa provides from the Ivory Coast.  Monday’s authorities information confirmed that Ivory Coast farmers shipped 1.698 MMT of cocoa to ports this advertising and marketing 12 months from October 1 to June 29, up +6.8% from final 12 months however down from the a lot bigger +35% enhance seen in December.  There are stories that heavy rain within the Ivory Coast is holding cocoa growers off their farms and is disrupting the continued mid-crop cocoa harvest.

In a bearish report launched final Wednesday, Nigerian Might cocoa exports fell by -29% y/y to 14,110 MT.  Nigeria is the world’s fourth-largest exporter of cocoa.

In late Might, NY cocoa rallied to a 5-month nearest-futures excessive on issues about climate in West Africa.  Regardless of the current rain in West Africa, drought nonetheless covers greater than a 3rd of Ghana and the Ivory Coast, in response to the African Flood and Drought Monitor.

Cocoa costs have help from high quality issues relating to the Ivory Coast’s mid-crop cocoa, which is at the moment being harvested via September.  Cocoa processors are complaining in regards to the high quality of the crop and have rejected truckloads of Ivory Coast cocoa beans.  Processors reported that about 5% to six% of the mid-crop cocoa in every truckload is of poor high quality, in contrast with 1% throughout the principle crop.  In response to Rabobank, the poor high quality of the Ivory Coast’s mid-crop is partly attributed to late-arriving rain within the area, which restricted crop development.  The mid-crop is the smaller of the 2 annual cocoa harvests, which usually begins in April.  The common estimate for this 12 months’s Ivory Coast mid-crop is 400,000 MT, down -9% from final 12 months’s 440,000 MT.

Concern about client demand for cocoa and cocoa merchandise is bearish for cocoa, pushed by fears that tariffs will exacerbate already excessive cocoa costs.  On April 10, Barry Callebaut AG, one of many world’s largest chocolate makers, decreased its annual gross sales steering as a result of excessive cocoa costs and tariff uncertainty.  Additionally, chocolate maker Hershey Co. just lately reported that Q1 gross sales fell by 14% and stated it anticipated $15-$20 million in tariff prices in Q2, which is able to enhance chocolate costs and additional weigh on client demand.  Mondelez Worldwide reported weaker-than-expected Q1 gross sales, stating that customers are slicing again on snack purchases as a result of financial uncertainty and excessive chocolate costs.  

Weaker demand from cocoa processors was seen in Q1.  Q1 North American cocoa grindings fell -2.5% y/y to 110,278 MT.  Q1 European cocoa grindings fell -3.7% y/y to 353,522 MT.  Q1 Asian cocoa grinding fell -3.4% y/y to 213,898 MT.

On Might 30, the Worldwide Cocoa Group (ICCO) revised its 2023/24 international cocoa deficit to -494,000 MT from a February estimate of -441,000 MT, the biggest deficit in over 60 years.  ICCO stated 2023/24 cocoa manufacturing fell -13.1% y/y to 4.380 MMT.  ICCO stated the 2023/24 international cocoa shares/grindings ratio fell to a 46-year low of 27.0%.  Looking forward to 2024/25, ICCO on February 28 forecasted a worldwide cocoa surplus of 142,000 MT for 2024/25, the primary surplus in 4 years.  ICCO additionally projected that 2024/25 international cocoa manufacturing will rise +7.8% y/y to 4.84 MMT. 

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