Cocoa Prices Higher on Tighter ICE Inventories

March ICE NY cocoa (CCH23) on Monday closed up +8 (+0.31%), and March ICE London cocoa #7 (CAH23) closed up +19 (+0.95%).

Cocoa prices Monday settled mildly higher on tighter cocoa inventories.  ICE-monitored NY cocoa inventories held in U.S. ports have fallen over the past four months and are moderately above the 9-1/2 month low from January 3.  Also, ICE-monitored cocoa stockpiles held in EU ports fell to a 10-month low Monday of 112,820 MT.  

Gains in London cocoa accelerated Monday after the British pound (^GBPUSD) fell to a 1-month low against the dollar.  The weaker pound boosts cocoa that is priced in sterling.

Cocoa prices have seen support from concern about the quality of some West African cocoa crops.  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.

On the positive side for cocoa are smaller cocoa exports from Nigeria after the Cocoa Association of Nigeria reported on January 24 that Nigeria's Dec cocoa exports fell -0.7% m/m and -73% y/y to 36,571 MT.  Nigeria is the world's fifth-largest cocoa bean producer.

Ample supplies from the Ivory Coast are bearish for cocoa prices.  Monday's government data showed that Ivory Coast farmers sent a cumulative 1.62 MMT MT of cocoa to Ivory Coast ports for the 2022/23 marketing year from October 1 through February 5, up +5.2% y/y.  

Global cocoa demand is tepid and is a negative factor for prices.  On January 19, the National Confectioners Association reported that Q4 North American cocoa grindings fell -8.1% y/y to 107,130 MT.  Also, the European Cocoa Association reported on January 19 that European Q4 cocoa grindings fell -1.7% y/y to 359,577 MT.  On January 18, the Cocoa Association of Asia reported that Asia Q4 cocoa grindings fell -0.2% y/y to 230,806 MT.  

The quarterly report from the ICCO on December 1 was bullish for cocoa prices after ICCO said global 2021/22 cocoa production fell -8.0% y/y to 4.823 MMT as unfavorable weather and disease hampered cocoa yields.  ICCO revised its 2021/22 global cocoa production figure downward by -419,000 MT from the September figure.  ICCO also raised the 2021/22 global cocoa deficit to -306,000 MT from a Sep forecast of -230,000 MT.  In 2020/21, global cocoa production rose to a record 5.242 MMT, and the global cocoa market was in a surplus of +209,000 MT.
 

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