Cocoa Prices Slip on Ample Supplies and Dollar Strength

September ICE NY cocoa (CCU22) on Tuesday closed down -19 (-0.80%), and September ICE London cocoa #7 (CAU22) closed down -6 (-0.34%).

Cocoa prices Tuesday posted moderate losses.  Ample cocoa supplies from the Ivory Coast are negative for cocoa prices after the Ivory Coast government reported Monday that Ivory Coast cocoa farmers sent a cumulative 2.32 MMT of cocoa to Ivory Coast ports from Oct 1-July 10, nearly unchanged y/y.  

Cocoa prices on Tuesday were undercut by the rally in the dollar index (DXY00) to a new 20-year high.  Cocoa prices also continue to be undercut by concern about a weaker global economy that could curb demand for commodities, including cocoa.

Cocoa prices rose from their worst levels Tuesday on signs of improved cocoa demand after Gepex, a cocoa exporter group that includes six of the world's biggest cocoa grinders, reported that Q2 Gepex cocoa demand rose +43% y/y to 156,723 MT.

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.

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, supports cocoa prices after last 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 Prices Rally on Price-Support Accord
• Cocoa Prices Fall Back on Ample Supplies and Suspect Demand
• Cocoa Consolidates After Recent Losses
• Cocoa Climbs as Heavy Ivory Coast Rain Keeps Farmers from Transporting Cocoa