Cocoa prices drop slightly as Ivory Coast resumes forward sales

WORLD- Cocoa prices closed relatively lower in the week ended July 12 after Ivory Coast’s regulator announced it will resume some forward sales for the 2024/2025 season. 

Cocoa futures decreased by 2.53% (-217) in New York and 2.87% (-201) in London in the reported week. 

The price decrease was mainly caused by the recent announcement by Ivory Coast’s cocoa regulator of plans to resume some forward sales for the 2024/2025 season, albeit to buyers with domestic processing plants. The country had stopped forward sales for the 2024/2025 season because of production concerns. 

The news was received positively by the market as an indication of potential production recovery. 

The sharp price decline is a continuation of the current price volatility in the cocoa market which has led to quick shifts in cocoa positions. In the week ended July 5, cocoa prices rose sharply after reports of ICE-monitored inventories had declined sharply to a 3 and a half year low of 3.16 million bags.  

Apart from Ivory Coast’s announcement on July 11, the other bearish factor affecting the market was a report by the European Cocoa Association that revealed European cocoa grindings increased by 4.4% year on year (YoY) to 357,500 tons in Q2 2024, beating the projected 2% decline.  

The other bearish factor affecting the market was Ghana’s cocoa regulator’s projection that the country’s 2024/2025 cocoa production will rebound and recover to 700,000 tons from the current estimates of 425,000 tons expected in the 2023/2024 season due to improved weather. 

However, concerns of supply chain challenges still persist, which is the most significant bullish factor in the market. 

Market jitters were reignited on July 9 after Ghana’s COCOBOD reduced prediction for the mid-crop by 25,000 tons, compared to an earlier prediction of 150,000 tons. Ivory Coast’s cocoa regulator had also reduced its prediction for the mid-crop by 33% to 400,000 tons compared to the 600,000 tons harvested during the previous season’s mid-crop. 

The International Cocoa Association (ICCO) had predicted a 439,000 ton cocoa deficit in the 2023/2024 season, another bullish factor for the cocoa market.  

The current volatility is expected to persist for the remainder of the 2023/2024 season, according to analysts. 

Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. HERE