Cocoa futures report mixed performance on demand-supply concerns, NASDAQ

WORLD- International cocoa futures fell to a 3-week low on predictions from players like Nestle SA that customers are likely to cut back on chocolate spending as the recent surge in cocoa prices is expected to be passed from manufacturers to customers amid fears of continued supply challenges.  

Cocoa futures in New York closed 6.28% lower in the week ended June 21. Futures in London recovered from early losses, closing at 1.17% in the same week owing to the weakness of the British Pound.  

According to analysts, the mixed performance is a testament to various bullish and bearish factors currently in the cocoa sector, indicating volatile times ahead for international cocoa prices. 

On June 20, Ghana’s cocoa regulator predicted that Ghana’s 2024/2025 cocoa production would increase to 700,000 metric tons, up from the current 425,000 metric tons expected in the 2023/2024 season. This prediction was another bearish factor for cocoa prices, as improved weather conditions are expected to further increase cocoa prices. 

However, these reports come barely a week after Ghana’s cocoa regulator announced delaying delivery of up to 350,000 metric tons of beans to the next season, which rallied cocoa prices to a month’s high. 

NASDAQ also reports future prices were also affected by data released by Ivory Coast’s government in the past few weeks, revealing supply is expected to shrink by 29% in the 2023/2024 season compared to the previous year. Ivory Coast also announced restrictions to companies and exporters without processing plants in the country, making it hard for them to purchase beans mid-crop until the end of June. 

The other bullish factor causing the current pricing uncertainties is dwindling international cocoa inventories. ICE-monitored cocoa inventories in the United States fell to a 3-year-low of 3.3 million bags in the week ended June 21.  

However, there are signs global cocoa demand will remain resilient despite high prices. The National Confectioners Association reported cocoa bean grindings increased by 9.3% in Q1 2024 in North America, the Cocoa Association of Asia reported cocoa grindings rose by 5.1% in Q1 2024 in Asia while the European Cocoa Association reported cocoa grindings increased by 4.7% in Europe.  

NASDAQ predicts an uncertain future for cocoa prices; it remains unclear when prices will begin to stabilize.