Cocoa Prices Slide on Ample Supplies Amid Demand Concerns

September ICE NY cocoa (CCU22) on Monday closed down -22 (-0.90%), and September ICE London cocoa #7 (CAU22) closed down -19 (-1.08%).

Cocoa prices on Monday dropped to 1-week lows and closed moderately lower.  Ample cocoa supplies from the Ivory Coast are bearish for prices after the Ivory Coast government reported Monday that Ivory Coast cocoa farmers sent a cumulative 2.27 MMT of cocoa to Ivory Coast ports from Oct 1-Jun 26, down only -1.3% y/y.

Concern that rising inflation and a slowdown in the global economy will curb demand for commodities, including cocoa, is negative for prices.  The International Cocoa Organization June 16 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.

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 Monday's data showed Nigeria's May cocoa exports fell -46% 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 Closes Slightly Higher on Dollar Weakness
• Cocoa Closes Moderately Lower on a Stronger Dollar
• Cocoa Prices Slip on Demand Concerns
• Cocoa Climbs on Smaller Supplies from the Ivory Coast