March ICE NY cocoa (CCH23) on Tuesday closed up +5 (+0.19%), and March ICE London cocoa #7 (CAH23) did not trade with markets in the UK closed for the Christmas holiday.
NY cocoa prices on Tuesday climbed to a 9-month high and closed slightly higher. Â A weaker dollar Tuesday (DXY00) was supportive for most commodity prices, including cocoa. Â Signs of tighter cocoa supplies are also bullish for prices after ICE-monitored NY cocoa inventories held in U.S. ports on Friday fell to a 7-month low. Â Also, ICE-monitored cocoa stockpiles held in EU ports Wednesday fell to an 8-1/2 month low of 112,880 MT.
Cocoa prices have seen support from concern about the quality of some West African cocoa crops. Â Cocoa farmers continue to struggle with the lack of fertilizer and pesticides as the war in Ukraine has limited Russian exports of potash and other fertilizers worldwide.
A bearish factor for cocoa prices is abundant supplies from the Ivory Coast after last Monday's news showed Ivory Coast farmers sent a cumulative 1.05 MMT MT of cocoa to Ivory Coast ports for the 2022/23 marketing year from October 1 through December 18, up +11% y/y.
Demand concerns are a bearish factor for cocoa prices after the CEO of Barry Callebaut, the world's largest maker of bulk chocolate, said last month that because so many customers stocked up on chocolate due to supply chain issues, demand is likely to be flat in into the first half of 2023. Â
The quarterly report from the International Cocoa Organization (ICCO) on December 1 was bullish for cocoa prices after ICCO said global 2021/22 cocoa production fell -6.8% y/y to 4.89 MMT as unfavorable weather and disease hampered cocoa yields. Â ICCO revised its 2021/22 global cocoa production figure downward by -67,000 MT from the September figure.
Larger cocoa exports from Nigeria are bearish for prices. Â Last Thursday's news showed that Nigeria's Nov cocoa exports jumped +130% m/m and +17% y/y to 36,819 MT. Â Nigeria is the world's fifth-largest cocoa bean producer.
Recent global cocoa demand has been mixed. Â The National Confectioners Association October 20 reported North American Q3 cocoa grindings fell -3.4% y/y to 119,244 MT. Â Also, the European Cocoa Association on October 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 ICCO on September 1 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.
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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