Cocoa Prices Slip on Demand Concerns

July ICE NY cocoa (CCN22) on Wednesday closed down -17 (-0.70%), and July ICE London cocoa #7 (CAN22) closed down -3 (-0.17%).

Cocoa prices Wednesday closed moderately lower on concern that rising inflation and a slowdown in the global economy will curb demand for commodities, including cocoa.  The International Cocoa Organization last Thursday released a report saying that "rising inflation could restrain the consumption of non-essentials and luxury goods including cocoa products should the situation persist."  

Signs of ample cocoa supplies are bearish for prices after ICE cocoa inventories June 9 rose to a 10-1/2 month high of 5.817 mln bags.

Smaller cocoa supplies from the Ivory Coast are bullish for prices after the Ivory Coast government reported Monday that Ivory Coast cocoa farmers sent a cumulative 2.24 MMT of cocoa to Ivory Coast ports from Oct 1-Jun 19, down -1.8% y/y.

In a bullish factor, the International Cocoa Organization (ICCO) on June 1 said that weather conditions and disease are negatively affecting cocoa production this year.  Also, trade disruptions and high freight rates are impacting the cocoa and fertilizer trade.  ICCO said the shortage of fertilizers on cocoa farms would likely hurt cocoa bean crop quantity, quality, and size next year.

A decline in cocoa supplies from Nigeria, the world's fourth-largest cocoa producer, is supportive of cocoa prices after May 26 data showed Nigeria's Apr cocoa exports fell -61% y/y to 12,497 MT.

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.

• Cocoa Climbs on Smaller Supplies from the Ivory Coast
• Cocoa Prices Firm on Pre-Weekend Short Covering
• Cocoa Prices Under Pressure from Demand Concerns
• NY Cocoa Closes Higher on Dryness in Nigeria