September ICE NY cocoa (CCU24) today is down -217 (-2.53%), and September ICE London cocoa #7 (CAU24) is down -201 (-2.87%).

Cocoa prices today are moderately lower after the Ivory Coast cocoa regulator said Thursday it had resumed some forward sales for the 2024/25 cocoa crop to buyers with domestic processing plants.  Due to production concerns, The Ivory Coast six months ago halted forward sales of the 2024/25 Ivory Coast cocoa crop.

On Thursday, cocoa prices rallied to 2-week highs on signs of more robust global cocoa demand.  The European Cocoa Association reported Thursday that Q2 European cocoa grindings unexpectedly rose +4.1% y/y to 357,502 MT, versus expectations of a -2% y/y decline.  Losses in London cocoa accelerated today after the British pound (^GBPUSD) rallied to an 11-1/2 month high.  The stronger pound undercuts cocoa priced in terms of sterling.

Lower cocoa production in the Ivory Coast, the world's largest producer, is bullish for prices.  Government data Monday showed that Ivory Coast farmers shipped 1.61 MMT of cocoa to ports from October 1 to July 7, down by -29% from the same time last year.  Trader Ecom Agroindustrial projects Ivory Coast 2023/24 cocoa production, which ends in September, will fall -21.5% y/y to an 8-year low of 1.75 MMT.  

Higher cocoa futures margins have forced traders to reduce their cocoa positions, which has led to thin trading conditions and high volatility.  Aggregate open interest in cocoa futures is now near the lowest since 2010.

US cocoa supplies have tightened.  ICE-monitored cocoa inventories held in US ports fell to a 3-1/2 year low Wednesday of 3,111,890 bags.  

A bearish factor for cocoa prices was the projection from Ghana's cocoa regulator on June 13 that Ghana's 2024/25 cocoa production will rebound to 700,000 MT from 425,00 MT in 2023/24 as improved weather conditions boost cocoa yields.  Ghana's 2024/25 cocoa harvest begins in October.

Cocoa prices have underlying support from concerns that the global cocoa shortage will persist.  Reuters reported on June 12 that Ghana is considering delaying the delivery of up to 350,000 MT of cocoa beans to next season due to the country's poor crops.  Ghana is the world's second-largest cocoa producer.  Also, on June 7, the Ivory Coast cocoa regulator, Le Conseil du Cafe-Cacao, told companies and exporters that don't have processing plants in the Ivory Coast that they can't buy cocoa beans from the Ivory Coast mid-crop until at least the end of this month.

Cocoa prices have been supported by concerns about the West African mid-crop, which is the smaller of two annual harvests.  Projections for the Ghana mid-crop, which starts in July, have been cut to 25,000 MT compared with an earlier forecast of 150,000 MT.  Also, the Ivory Coast cocoa regulator said on March 7 that it expects the Ivory Coast mid-crop, which officially starts in April, to fall -33% to 400,000 MT from 600,000 MT last year.  In addition, projections for Nigeria's mid-crop have been reduced to 76,500 MT from an earlier estimate of 90,000 MT.  Ghana's Cocoa Board (Cocobod) said on March 25 that Ghana's 2023/24 cocoa harvest would be only 422,500 MMT to 425,000 MT, half the country's initial forecast and a 22-year low, as extreme weather and disease decimated the cocoa crop.

In a bullish factor, the International Cocoa Association (ICCO) on May 31 projected a 439,000 MT cocoa deficit for 2023/24, 17% larger than its February estimate of 374,000 MT and far larger than the 74,000 MT deficit in 2022/23.  ICCO said, "Current available data reveal that cocoa grinding activities have so far been unrelenting in importing countries despite the record cocoa price rallies.  As the 2023-24 season progresses, it is certain the season will end in a higher deficit than previously expected."  ICCO raised its 2023-24 grindings estimate to 4.855 MMT from 4.779 MMT, representing a -4.3% y/y fall from 2022/23.  ICOO raised its production projection from February by 12,000 MT to 4.461 MMT, representing a -11.7% y/y decline from 2022/23.  In addition, ICCO projects a 2023/24 global cocoa stocks/grindings ratio of a 46-year low of 27.4%.
 



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