
Sep ICE NY cocoa (CCU21) on Thursday closed down -33 (-1.37%), and Sep ICE London cocoa #7 (CAU21) closed down -30 (-1.84%).
Cocoa prices on Thursday closed moderately lower. Cocoa prices are under pressure on concern the spread of the Covid delta variant worldwide will reduce economic activity and demand for commodities, including cocoa. The delta variant has forced renewed lockdowns across parts of Asia and Australia. Tokyo reported 1,308 new Covid infections Thursday, the most in 6 months, and the 7-day average of new U.S. Covid infections rose to a 7-week high Wednesday of 25,144.
A positive for cocoa is a rebound in European cocoa demand after the European Cocoa Association reported Tuesday that European Q2 cocoa processing rose +14% y/y to 356,854 MT, well above the consensus of +7.5% y/y and the largest Q2 increase in over ten years.
An excessive short position from funds may provide fuel for any short-covering rally after weekly COT data last Friday showed funds boosted their net-short NY cocoa positions by +9,998 the week ended July 6 to 11,744, an 11-month high. Also, last Friday's weekly COT data showed funds boosted their net-short London positions by 1,577 in the week ended July 6 to 23,310, a 3-year high.
The Ivory Coast government reported Monday that Ivory Coast farmers sent 13,370 MT of cocoa to ports July 5-11, down -45% y/y. However, cumulative data show 2.33 MMT of cocoa sent to Ivory Coast ports during Oct 1-July 11, up +7.4% y/y.
Cocoa prices have recently seen weakness due to concern about abundant global cocoa supplies. The International Cocoa Organization (ICCO) on May 31 raised its global 2020/21 cocoa production estimate to a record 5.02 MMT, up +6.3% y/y. ICCO also raised its global 2020/21 cocoa surplus estimate to +165,000 MT from a Feb forecast of +102,000 MT.
Current cocoa supplies are robust after ICE-monitored cocoa inventories climbed to a record high of 5.860 mln bags last Wednesday (data from 1999).