December ICE NY cocoa (CCZ24) Thursday closed down -128 (-1.65%).  September ICE London cocoa #7 (CAU24) closed down -92 (-1.62%).

Cocoa prices posted moderate losses on Thursday as forecasts for rain in West Africa improved the region's cocoa crop prospects.  Forecaster Maxar Technologies said that current rain in West Africa is expected to continue through the weekend, boosting soil moisture levels and cocoa yields.  

Cocoa prices also have negative carryover from Wednesday on news that showed Nigeria's July cocoa exports jumped +31% y/y to 17,456 MT.  Nigeria is the world's sixth-largest cocoa producer.

On Monday, NY cocoa rallied to a 2-month high due to concern that excessively dry conditions in West Africa could curb the region's cocoa production.  Forecaster Maxar Technologies said last week that top cocoa-producing countries Ivory Coast and Ghana had seen a "significant decrease in shower activity" over the past month, leading to below-normal soil moisture and limited crop growth.

Lower cocoa production in the Ivory Coast, the world's largest producer, is bullish for cocoa prices.  Government data Wednesday showed that Ivory Coast farmers shipped 1.69 MMT of cocoa to ports from October 1 to August 25, down by -28% from the same time last year.  

Tighter US cocoa supplies are also supportive of prices.  ICE-monitored cocoa inventories held in US ports fell to a 15-year low Thursday of 2,488,992 bags.

Cocoa also has support after Ghana's Cocoa Board (Cocobod) last Tuesday cut its 2024/25 Ghana cocoa production estimate to 650,000 MT from a June forecast of 700,000 MT.  Due to bad weather and crop disease, Ghana's 2023/24 coca harvest sank to a 23-year low of 425,000 MT.  Ghana is the world's second-biggest cocoa producer, and its 2024/25 cocoa harvest begins in October.

An increase in cocoa production by Cameroon, the world's fifth-largest cocoa producer, is bearish for cocoa prices.  Last Wednesday, Cameroon's National Cocoa and Coffee Board reported that 2023/24 (Aug/July) Cameroon cocoa production rose +1.2% y/y to 266,725.

Trader Ecom Agroindustrial projects Ivory Coast cocoa production in the 2023/24 marketing year, which ends in September, will fall -21.5% y/y to an 8-year low of 1.75 MMT.

Cocoa prices have been supported by better-than-expected cocoa demand.  The National Confectioners Association reported on July 18 that North America Q2 cocoa grindings rose +2.2% y/y to 104,781 MT, stronger than estimates for a slight decline.  Also, the Cocoa Association of Asia reported on July 18 that Asian Q2 cocoa grindings fell -1.4% y/y to 210,958 MT, a smaller decline than expectations of -2.0% y/y.  The European Cocoa Association reported on July 11 that Q2 European cocoa grindings unexpectedly rose +4.1% y/y to 357,502 MT, versus expectations of a -2% y/y decline.  

Cocoa prices have underlying support from concern about the availability of cocoa beans for buyers.  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.  Meanwhile, the Ivory Coast cocoa regulator, Le Conseil du Cafe-Cacao, announced on June 7 that companies that do not have processing plants in the Ivory Coast cannot buy cocoa beans from the Ivory Coast mid-crop until at least the end of July.  The Ivory Coast cocoa regulator on July 11 at least allowed forward sales to resume for the 2024/25 cocoa crop to buyers with domestic processing plants.

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.  ICOO projects that 2023/24 cocoa production will fall -11.7% y/y to 4.461 MMT.  In addition, ICCO projects a 2023/24 global cocoa stocks/grindings ratio of a 46-year low of 27.4%.
 



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