Cocoa Closes Higher on Reduced Exports from Nigeria

July ICE NY cocoa (CCN22) on Thursday closed up +57 (+2.37%), and July ICE London cocoa #7 (CAN22) closed up +14 (+0.82%).

Cocoa prices Thursday closed moderately higher.  A decline in cocoa supplies from Nigeria, the world's fourth-largest cocoa producer, sparked short-covering in cocoa futures after Thursday's data showed Nigeria's Apr cocoa exports fell -61% y/y to 12,497 MT.

On Wednesday, NY cocoa dropped to a 5-3/4 month low, and London fell to a 2-week low, on signs that higher chocolate prices are curbing demand.  Data from market researcher IRI shows U.S. chocolate sales in the 13-week period ending May 15 fell -6.3% y/y, while prices rose +11% y/y.

An increase in ICE cocoa inventories is bearish for prices.  ICE cocoa inventories Wednesday rose to a 6-1/2 month high of 5.229 mln bags.  

Ample cocoa supplies are bearish for prices after the  Ivory Coast government reported Tuesday that Ivory Coast cocoa farmers sent a cumulative 2.13 MMT of cocoa to Ivory Coast ports from Oct 1-May 22, down only -0.9% y/y.

The prospect for bumper cocoa crops this year in West Africa is a bearish factor for prices.  Cocoa farmers in the Ivory Coast and Ghana, the world's two largest cocoa producers, have reported favorable weather conditions that should boost cocoa yields.

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.

Cocoa prices have support on signs of stronger global cocoa demand.  Gepex, a cocoa exporter group that includes six of the world's biggest cocoa grinders, reported May 11 that the group processed 49,148 MT of cocoa in April, up +16.3% y/y.  

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.