December ICE NY cocoa (CCZ22) on Friday closed up +62 (+2.61%), and December ICE London cocoa #7 (CAZ22) closed up +49 (+2.46%).
Cocoa prices rallied Friday as the dollar index (DXY00) fell sharply by -1.7%, boosting dollar-based commodity prices in general.
Cocoa prices also have underlying support as dock workers at Ivory Coast's western port of San Pedro continue their strike that started on October 24 demanding a pay increase, which has delayed loadings of some cocoa. Â There are concerns that the dock-worker strike could spread to the Ivory Coast's main commercial center of Abidjan.
In a bullish factor, Rabobank Thursday cut its Ghana 2022/23 cocoa crop estimate to 760,000 MT from a prior estimate of 800,000 MT, citing "concerns regarding fertilizer and chemical availability which is likely to stunt cocoa yields."
Cocoa prices have carry-over support from Monday on reports that the rainy season recently caused an outbreak of black pod disease in some west-African growing areas. Â In addition, cocoa farmers continue to struggle with the lack of fertilizer and pesticides. Â The war in Ukraine has limited Russian exports of potash and other fertilizers worldwide.
Smaller cocoa supplies from Nigeria are bullish for cocoa after last Friday's report showed Nigeria's Sep cocoa exports fell -16% y/y to 11,094 MT due to excessive rain. Â Nigeria is the world's fifth-largest cocoa bean producer.
Delays in the transportation of cocoa supplies from farms to ports in the Ivory Coast due to heavy rain are a near-term supportive factor for cocoa prices. Â The Ivory Coast government reported Monday that Ivory Coast cocoa farmers sent a cumulative 295,432 MT of cocoa to Ivory Coast ports for the 2022/23 season (which began Oct 1, 2022), down -20.6% from the same time last year. Â
Recent global cocoa demand has been mixed. Â The National Confectioners Association last Friday reported North American Q3 cocoa grindings fell -3.4% y/y to 119,244 MT. Â Also, the European Cocoa Association on Oct 13 reported that European Q3 cocoa grindings fell -1.6% y/y to 369,679 MT, the first y/y decline since Q1 of 2021. Â Conversely, the Cocoa Association of Asia said Asia Q3 cocoa grindings rose +9.5% y/y to 231,080 MT. Â Also, exporter group Gepex, which includes six of the world's biggest cocoa grinding companies, reported Q3 Ivory Coast cocoa grindings rose +18.1% y/y to 171.540 MT.
Cocoa prices found support when the International Cocoa Organization (ICCO) on September 1 cut its 2021/22 global cocoa production estimate to 4.890 MMT from a June forecast of 4.923 MMT and raised its 2021/22 global cocoa deficit estimate to -230,000 MT from a June forecast of -174,000 MT. Â In 2020/21, global cocoa production rose to a record 5.24 MMT, and in 2020/21, the global cocoa market was in a surplus of +215,000 MT.
In a bullish factor, Ghana reported on July 27 that its 2021/22 cocoa crop fell by -35% y/y to 685,000 MT, the smallest crop in 12 years, due to drought and swollen shoot virus. Â Ghana is the world's second-largest cocoa producer. Â However, the Ghana Cocoa Board estimates 2022/23 Ghana cocoa production will rebound +31% y/y to 850,000 MT.
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