S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
March ICE NY cocoa (CCH26) on Thursday closed up +162 (+2.74%). March ICE London cocoa #7 (CAH26) closed up +109 (+2.56%).
Cocoa prices rallied sharply on Thursday to 1-week highs, rebounding from Wednesday’s 1-month lows. Expectations of index-related buying of cocoa futures to rebalance commodity indexes propelled cocoa prices sharply higher on Thursday. Peak Trading Research estimates that the annual rebalancing of commodity indexes within the next week could lead to purchases of about 37,000 cocoa futures contracts, representing nearly 31% of the aggregate open interest.
On Wednesday, cocoa prices tumbled to 1-month lows amid favorable growing conditions in West Africa. Tropical General Investments Group said last Friday that favorable growing conditions in West Africa are expected to boost the February-March cocoa harvest in the Ivory Coast and Ghana, as farmers report larger and healthier pods compared with the same period last year.
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. Harvest of the Ivory Coast’s main crop has begun, and farmers are optimistic about its quality.
Cocoa prices have support on signs of smaller cocoa supplies from the Ivory Coast. Monday’s cumulative data shows Ivory Coast farmers shipped 1.073 MMT of cocoa to ports this new marketing year (October 1 through January 4), down -3.3% from 1.11 MMT in the same period a year ago. The Ivory Coast is the world’s largest cocoa producer.
Cocoa prices also have underlying support from expectations for index-related buying tied to the addition of cocoa futures to the Bloomberg Commodity Index (BCOM) starting this month. According to Citigroup, the inclusion of cocoa in the BCOM may lure as much as $2 billion of buying of NY cocoa futures.
Shrinking cocoa inventories are bullish for prices after ICE-monitored cocoa inventories held in US ports fell to a 9.75-month low of 1,626,105 bags on December 26. However, inventories have since recovered to a 3.5-week high of 1,658,056 bags on Thursday.
Cocoa prices have support on 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 last Tuesday cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.
Cocoa prices were undercut after the European Parliament on November 26 approved a 1-year delay to the deforestation law, keeping cocoa supplies ample. The EU regulation, known as EUDR, aims to tackle deforestation in countries whose imports into the EU include key commodities such as soybeans and cocoa. The delay of the EUDR will allow EU countries to continue importing agricultural products from regions in Africa, Indonesia, and South America where deforestation is occurring.
Weak global cocoa demand is bearish for prices. 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 -12.9% y/y to 4.368 MMT. ICCO on December 19 estimated a 2024/25 global cocoa surplus of 49,000 MT, marking the first surplus in four years. ICCO also said global cocoa production in 2024/25 rose by +7.4% y/y to 4.69 MMT.
