September ICE NY cocoa (CCU22) on Friday closed down -36 (-1.53%), and September ICE London cocoa #7 (CAU22) closed down -33 (-1.89%).
Cocoa prices Friday settled moderately lower. Â Cocoa prices have been under pressure this week, with NY cocoa falling to an 11-1/2 month low Tuesday and London cocoa dropping to a 1-3/4 month low. Â This week, a rally in the dollar index (DXY00) to a 20-year high undercut commodity prices. Â Also, concern that rising inflation and a slowdown in the global economy will curb demand for commodities, including cocoa, is bearish for prices. Â 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." Â
Signs of abundant cocoa supplies are bearish for prices after ICE cocoa inventories on June 9 rose to a 10-1/2 month high of 5.817 mln bags.
Smaller cocoa supplies from the Ivory Coast are supportive for prices after the Ivory Coast government reported Tuesday that Ivory Coast cocoa farmers sent a cumulative 2.29 MMT of cocoa to Ivory Coast ports from Oct 1-July 3, down -1.3% y/y. Â
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. Â Also, trade disruptions and high freight rates are impacting the cocoa and fertilizer trade. Â 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, supports 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. Â 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.
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