Cocoa Prices Settle Lower on Expectations of Adequate Supplies

March ICE NY cocoa (CCH26) on Thursday closed down -44 (-0.74%), and March ICE London cocoa #7 (CAH26) closed down -24 (-0.55%).

Cocoa prices settled lower on Thursday, with NY cocoa falling to a 1-week low. Favorable weather in West Africa is expected to boost yields and supply, which is bearish for prices. Cocoa farmers in the Ivory Coast are reporting that a mix of rain and sunshine is helping cocoa trees bloom, and farmers in Ghana said rains have been regular and helpful to cocoa tree and pod development ahead of the harmattan season.

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Chocolate maker Mondelez recently said that the latest cocoa pod count in West Africa is 7% above the five-year average and "materially higher" than last year's crop. The harvest of the Ivory Coast's main crop has just begun, and farmers are optimistic about its quality.

Shrinking ICE cocoa inventories are also supportive of cocoa prices. ICE-monitored cocoa inventories held in US ports fell to a 9-month low of 1,642,801 bags on Thursday.

Cocoa prices found some support on Tuesday, when Citigroup cut its 2025/26 global cocoa surplus estimate to 79,000 MT from a September estimate of 134,000 MT.

Cocoa futures also have support, as NY cocoa will be included in the Bloomberg Commodity Index (BCOM) starting in January, which could spark buying by passive commodity funds that track the index. According to Citigroup, the inclusion of NY cocoa futures in the BCOM may lure as much as $2 billion of buying of NY cocoa futures into the first week of January.

Increased cocoa arrivals at ports in the Ivory Coast are bearish for cocoa prices. Monday's government data showed that Ivory Coast farmers shipped 895,544 MT of cocoa to ports this new marketing year, from October 1 through December 14, up +0.2% from 894,009 MT in the same period a year ago. The Ivory Coast is the world's largest cocoa producer.

Cocoa prices have recently rallied sharply, hitting 5-week highs last Thursday, amid a tightening global supply outlook. On November 28, the International Cocoa Organization (ICCO) cut its global 2024/25 cocoa surplus estimate to 49,000 MT from a previous estimate of 142,000 MT. It also lowered its global cocoa production estimate for 2024/25 to 4.69 MMT from 4.84 MMT previously. In addition, Rabobank on Tuesday cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.

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