Africa News Bulletin

Cote D’voire- Cocoa Prices Retreat On Ample Ivory Coast Cocoa Supplies

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

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