Cocoa May '19 (CCK19)Get Real-Time Futures
Cocoa Futures Market News and Commentary
March ICE NY cocoa (CCH19) on Friday closed up +75 (+3.36%) and March ICE London cocoa (CAH19) closed up +47 (+2.74%). Cocoa prices rallied Friday with Mar NY cocoa at a 4-week high and Mar London cocoa at a 6-week high on weather concerns in West Africa. Forecasts for above-normal temperatures with dry conditions over the next week in West Africa may increase stress on Ivory Coast and Ghana cocoa crops and spurred fund buying in cocoa futures. The outlook for robust cocoa production in West Africa has weighed on prices after Monday's data from the Ivory Coast, the world's biggest cocoa producer, showed that Ivory Coast farmers sent 1.413 MMT of cocoa to ports during Oct 1-Feb 10, up +8.3% from the same time last year. Also, Monday's data from Ghana, the world's second-biggest cocoa producer, showed strong output as cocoa purchases from Ghana cocoa farmers rose +15.4% y/y to 644,318 MT during the first seventeen weeks of the harvest from Oct 5-Jan 31. Mar London cocoa was also weighed down by weakness in GBP/USD which fell to a 1-month low Thursday. Weakness in GBP/USD undercuts the price of London cocoa that is priced in British pounds. Cocoa prices have underlying support from firm global demand with North American Q4 cocoa processing up +1.2% to 117,526 MT (Jan 18 report), Q4 European cocoa grindings up +1.6% y/y to 359,103 MT (Jan 16 report), and Asian Q4 cocoa grindings up +6.3% y/y to 208,900 MT.Big Picture Cocoa Market Factors: Bullish factors for cocoa include (1) the forecast from Radiant Solutions that "mid-crop growth will be minimal" for cocoa crops as weather conditions throughout the Ivory Coast and Ghana have been overwhelmingly dry, and (2) strong cocoa demand in Asia after the Singapore Cocoa Association reported that Asia Q4 cocoa grindings unexpectedly rose +6.3% y/y to 208,900, stronger than expectations for a decline of -1.3% y/y, and as Asia 2018 full-year cocoa grindings rose +7.8% y/y to 780,956 MT, the highest since data began in 2011. Bearish factors for cocoa include (1) ICCO's forecast for a small global cocoa surplus of +22,000 MT in 2017/18, although that is down sharply from 2016/17's 6-year high surplus of 296,000 MT, (2) the projection from Barry Callebaut, the world's biggest cocoa processor, that global supply may match demand in 2019 amid robust global cocoa output, and (3) signs of tepid demand after the National Confectioners Association reported North American Q4 cocoa processing rose +1.2% to 117,526 MT, weaker than expectations of +2.5%, and after the European Cocoa Association reported that Q4 European cocoa grindings rose +1.6% y/y to 359,103 MT, below expectations of +2.0% y/y.
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