Cocoa prices Friday closed slightly lower as they consolidated this week’s losses. On Wednesday, NY cocoa dropped to a 5-3/4 month low, and London fell to a 2-week low on signs that higher chocolate prices are curbing demand. Data from market researcher IRI shows U.S. chocolate sales in the 13-week period ending May 15 fell -6.3% y/y, while prices rose +11% y/y.
An increase in ICE cocoa inventories is bearish for prices. ICE cocoa inventories Thursday rose to a 6-1/2 month high of 5.255 mln bags.
Ample cocoa supplies are bearish for prices after the Ivory Coast government reported Tuesday that Ivory Coast cocoa farmers sent a cumulative 2.13 MMT of cocoa to Ivory Coast ports from Oct 1-May 22, down only -0.9% y/y.
The prospect of bumper cocoa crops this year in West Africa is a bearish factor for prices. Cocoa farmers in the Ivory Coast and Ghana, the world’s two largest cocoa producers, have reported favorable weather conditions that should boost cocoa yields.
A decline in cocoa supplies from Nigeria, the world’s fourth-largest cocoa producer, is supportive of cocoa prices after Thursday’s data showed Nigeria’s Apr cocoa exports fell -61% y/y to 12,497 MT.
The outlook for bigger cocoa production in Cameroon, the world’s fifth-largest cocoa producer, is negative for cocoa prices after the director-general of the Cocoa Development Corp on Apr 13 projected that Cameroon’s 2021/22 cocoa production would climb +20% y/y to 350,400 MT.
Demand concerns are weighing on cocoa prices after the North American Confectioners Association reported on Apr 22 that Q1 North American cocoa grindings fell -2.8% y/y to 114,694 MT. Also, the Cocoa Association of Asia reported Asian Q1 cocoa grindings fell -0.25% y/y to 213,313 MT. On the supportive side, however, the European Cocoa Association reported Apr 14 that Q1 European cocoa grindings rose +4.4% y/y to 373,498 tons, the most in more than a decade.
Cocoa prices have support on signs of stronger global cocoa demand. Gepex, a cocoa exporter group that includes six of the world’s biggest cocoa grinders, reported May 11 that the group processed 49,148 MT of cocoa in April, up +16.3% y/y.
On Feb 28, the International Cocoa Organisation (ICCO) projected that global 2021/22 cocoa production would fall -by 5.2% y/y to 4.955 MMT from a record 5.226 MMT in 2020/21. ICCO also estimates the global 2021/22 cocoa market will fall into a deficit of -181,000 MT from a surplus of +215,000 in 2020/21.
Big Picture Cocoa Market Factors:
World cocoa production in 2021/22 (Oct/Sep) will fall -5.2% y/y to 4.955 MMT, and global 2021/22 cocoa grindings will rise +2.6% y/y to 5.09 MMT (ICCO). ICCO forecasts a global 2021/22 cocoa deficit -181,000 MT from a +215,000 MT surplus in 2021/21. The 2020/21 stocks/grindings ratio will shrink 34.3% from 38.9% in 2020/21. Ivory Coast 2019/20 cocoa production (main crop Oct-Mar; mid-crop May-Aug) rose +1.2% y/y to 2.18 MMT, while Ghana 2019/20 cocoa production (main crop Sep-Mar; mid-crop May Aug) rose +2.3% y/y to 850,00 MMT (ICCO).