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December ICE NY cocoa (CCZ25) on Monday closed up +89 (+1.48%), and December ICE London cocoa #7 (CAZ25) closed up +36 (+0.83%).
Cocoa prices recovered from 1.5-week lows on Monday and settled higher on signs of a slowdown in cocoa exports from the Ivory Coast, the world’s largest cocoa producer. Monday’s government data showed that Ivory Coast farmers shipped 411,979 MT of cocoa to ports this new marketing year, from October 1 through November 8, down -9% from 454,624 MT in the same period a year ago.
Gains in London cocoa were limited on Monday after the British pound (^GBPUSD) rallied to a 1-week high, undercutting cocoa priced in sterling.
An excessively short position by funds in London cocoa could fuel any short-covering rally. Last Friday’s weekly Commitment of Traders (COT) report showed funds boosted their net-short positions in London cocoa by 3,746 in the week ended November 4, to 19,194, the highest level of short positions in more than 4 years. There is no current data on positions in NY cocoa, as the US government is currently closed.
Since posting 6-week highs last Tuesday, cocoa prices have retreated amid expectations of a bumper cocoa crop in West Africa. Reports from Ivory Coast cocoa farmers stated that cocoa trees are doing well, and recent dry weather helped harvested beans dry, while cocoa farmers in Ghana said favorable weather is allowing cocoa pods to develop quickly.
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.
Last Tuesday, cocoa prices rallied to 6-week highs as short-covering emerged from news on October 30 that the administrator of the Bloomberg Commodity Index (BCOM) said cocoa will be included in the index for the first time in 2 decades, beginning in January. Assets tracking the BCOM index totaled almost $109 billion at the end of 2024, suggesting cocoa’s 1.7% weighting in the index could spur significant inflows into the market from passive funds that track it. According to Peak Trading Research LLC, “Funds will have to buy about $1.9 billion in cocoa futures over the next 80 days.”
Shrinking ICE cocoa inventories are supportive for cocoa prices. ICE-monitored cocoa inventories held in US ports fell to a 7.5-month low of 1,793,757 bags last Thursday.
Cocoa prices have been undercut by fears that high cocoa prices and tariffs could dampen chocolate demand. North American sales volume of chocolate candy was down more than -21% in the 13 weeks ending September 7, compared to the same period last year, according to data from research firm Circana.
Weak global cocoa demand is bearish for prices. On October 30, the CEO of chocolate-maker Hershey said chocolate sales this Halloween season were “disappointing.” Halloween made up nearly 18% of annual US candy sales in 2024, second only to Christmas. Meanwhile, the Cocoa Association of Asia on October 17 reported that Q3 Asia cocoa grindings fell by -17% y/y to 183,413, the smallest grindings for a Q3 in 9 years. The European Cocoa Association on October 16 reported that Q3 European cocoa grindings fell -4.8% y/y to 337,353 MT, the lowest for a third quarter in 10 years. The National Confectioners Association reported that Q3 North American cocoa grindings rose +3.2% y/y to 112,784 MT, but the addition of new reporting companies skewed the data.
A supportive factor for cocoa is lower cocoa production in Nigeria, the world’s fifth-largest cocoa producer. Nigeria’s Cocoa Association projects that Nigeria’s 2025/26 cocoa production will fall by -11% y/y to 305,000 MT from a projected 344,000 MT for the 2024/25 crop year. In related news, Nigeria reported that its September cocoa exports were unchanged y/y at 14,511 MT.
On May 30, the International Cocoa Organization (ICCO) revised its 2023/24 global cocoa deficit to -494,000 MT, the largest deficit in over 60 years. ICCO said 2023/24 cocoa production fell by -13.1% y/y to 4.380 MMT. ICCO stated that the 2023/24 global cocoa stocks-to-grindings ratio declined to a 46-year low of 27.0%. For 2024/25, ICCO estimated a global cocoa surplus of 142,000 MT, marking the first surplus in four years. ICCO also said global cocoa production in 2024/25 rose by +7.8% y/y to 4.84 MMT.
