Cocoa Prices Rebound on Dollar Weakness

July ICE NY cocoa (CCN22) on Friday closed up +36 (+1.48%), and July ICE London cocoa #7 (CAN22) closed up +13 (+0.74%).

Cocoa prices Friday recovered from early losses and closed moderately higher.  NY cocoa recovered from a 2-week low Friday and moved higher after a weaker dollar sparked short-covering in cocoa futures.   London cocoa Friday also garnered support after the British pound (^GBPUSD) fell to a 2-year low, which boosted cocoa priced in terms of sterling.

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.  

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.  

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.
 

Big Picture Cocoa Market Factors: World cocoa production in 2021/22 (Oct/Sep) will fall -5.2% y/y to 4.955 MMT, and global 2021/22 cocoa grindings will rise +2.6% y/y to 5.09 MMT (ICCO).  ICCO forecasts a global 2021/22 cocoa deficit -181,000 MT from a +215,000 MT surplus in 2021/21.  The 2020/21 stocks/grindings ratio will shrink 34.3% from 38.9% in 2020/21.  Ivory Coast 2019/20 cocoa production (main crop Oct-Mar; mid-crop May-Aug) rose +1.2% y/y to 2.18 MMT, while Ghana 2019/20 cocoa production (main crop Sep-Mar; mid-crop May Aug) rose +2.3% y/y to 850,00 MMT (ICCO).