Cocoa prices Monday posted moderate losses. Ample cocoa supplies from the Ivory Coast weigh on prices after the Ivory Coast government reported Monday that Ivory Coast cocoa farmers sent a cumulative 1.53 MMT of cocoa to Ivory Coast ports from Oct 1-Feb 6, up +0.7% y/y.
The downside in cocoa prices over the near term may be limited on concern the seasonal Harmattan winds in West Africa will dry out cocoa crops and reduce cocoa mid-crop output in the Ivory Coast and Ghana. Some cocoa farmers in the Ivory Coast have reported inadequate soil moisture levels due to the Harmattan winds and a lack of rain.
An improvement in the pandemic is also supportive of cocoa prices. The 7-day average of new U.S. Covid infections fell to a 1-1/2 month low Sunday of 291,998, which may ease travel restrictions and boost chocolate demand as more travelers flock to airports, a significant source of chocolate sales.
Recent data shows improved U.S. chocolate demand as data from researcher IRI shows U.S. retail chocolate sales in Q4 rose +5% y/y.
Global cocoa demand in Q4 was mixed. The National Confectioners Association reported last Thursday that North American Q4 cocoa grindings unexpectedly fell -1.2% y/y to 116,614 MT, much weaker than expectations of a +4.6% y/y increase. Conversely, last Wednesday, the European Cocoa Association reported Q4 European cocoa processing rose +6.3% y/y to 365,826 MT, stronger than expectations of +6.0% y/y. Total 2021 European cocoa processing rose +6.1% y/y to 1.46 MMT, the highest since 1999. Also, Asia Q4 cocoa grindings rose +6.3% y/y to 231,309 MT, stronger than expectations of +2.3% y/y.
Increased cocoa exports from Nigeria, the world’s fifth-largest cocoa producer, are bearish for prices after Nigeria Dec cocoa exports surged +190% y/y to 134,227 MT.
Tighter cocoa supplies support prices after ICE-monitored U.S. cocoa inventories fell to a 9-1/2 month low Jan 27, down from the record high of 5.86 mln bags (data from 1999) posted on June 30. Also, ICE-monitored EU cocoa inventories fell to a 9-1/2 month low Jan 25.
The outlook for a smaller cocoa crop in Ghana is bullish for prices after the Ghana Cocoa Board on Oct 6 projected a Ghana 2021/22 cocoa harvest of 950,000 MT, down -5.6% y/y from 1.06 MMT projected for the 2020/21 crop.
On Aug 31, the International Cocoa Organization (ICCO) raised its global 2020/21 cocoa production estimate to a record 5.14 MMT from a previous estimate of 5.02 MMT, and on Tuesday cut its global 2020/21 cocoa surplus estimate to 212,000 MT from a previous estimate of 230,000 MT.
Original story on Barchart