Cocoa Prices Decline on a Stronger Dollar

July ICE NY cocoa (CCN22) on Thursday closed down -56 (-2.25%), and July ICE London cocoa #7 (CAN22) closed down -25 (-1.40%).

Cocoa prices Thursday posted moderate losses, with NY cocoa falling to a 2-week low.  A surge in the dollar index (DXY00) Thursday to a 19-year high weighed on most commodity prices, including cocoa.  Losses in London cocoa were limited after the British pound (^GBPUSD) Thursday fell to a 2-year low, which boosts cocoa that is priced in terms of sterling.

Signs of abundant cocoa supplies are also bearish for prices.  The Ivory Coast government reported Monday that Ivory Coast cocoa farmers sent a cumulative 2.06 MMT of cocoa to Ivory Coast ports from Oct 1-May 8, nearly unchanged from last year's 2.07 MMT.  

Signs of stronger global cocoa demand are a positive factor for cocoa prices.  Gepex, a cocoa exporter group that includes six of the world's biggest cocoa grinders, reported Wednesday that the group processed 49,148 MT of cocoa in April, up +16.3% y/y.  

Increased cocoa supplies from Nigeria, the world's fourth-largest cocoa producer, are bearish for prices after data on April 27 showed Nigeria's Mar cocoa exports rose +31.4% y/y to 28,149 MT.

The outlook for bigger cocoa production in Cameroon, the world's fifth-largest cocoa producer, is negative for cocoa prices after the director-general of the Cocoa Development Corp on Apr 13 projected that Cameroon's 2021/22 cocoa production would climb +20% y/y to 350,400 MT.

Demand concerns are weighing on cocoa prices after the North American Confectioners Association reported on Apr 22 that Q1 North American cocoa grindings fell -2.8% y/y to 114,694 MT.  Also, the Cocoa Association of Asia reported Asian Q1 cocoa grindings fell -0.25% y/y to 213,313 MT.  On the supportive side, however, the European Cocoa Association reported Apr 14 that Q1 European cocoa grindings rose +4.4% y/y to 373,498 tons, the most in more than a decade.

On Feb 28, the International Cocoa Organization (ICCO) projected that global 2021/22 cocoa production would fall -by 5.2% y/y to 4.955 MMT from a record 5.226 MMT in 2020/21.  ICCO also estimates the global 2021/22 cocoa market will fall into a deficit of -181,000 MT from a surplus of +215,000 in 2020/21.