Cocoa Gains as Flooded Ivory Coast Roads Limits Cocoa Transports

September ICE NY cocoa (CCU22) on Tuesday closed up +18 (+0.77%), and September ICE London cocoa #7 (CAU22) closed up +20 (+1.17%).

Cocoa prices Tuesday posted moderate gains.  Cocoa prices rose Tuesday as heavy rain in the Ivory Coast flooded roads and prevented cocoa farmers from reaching plantations or getting harvested cocoa to buyers.

Cocoa prices last Thursday tumbled to a 1-year low on signs of weak global cocoa demand.  Researcher IRI reported last Thursday that the volume of chocolate products sold in the U.S. dropped -1.5% y/y in the 13 weeks ended June 12.  Also, slack European cocoa demand is bearish for prices after the European Cocoa Association reported last Wednesday that European Q2 cocoa grindings fell -2.5% q/q to 364,081 MT.

Ample cocoa supplies from the Ivory Coast are also negative for cocoa prices after the Ivory Coast government reported Tuesday that Ivory Coast cocoa farmers sent a cumulative 2.35 MMT of cocoa to Ivory Coast ports from Oct 1-July 17, up +0.4%  y/y.  

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 data July 4 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.

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