Cocoa prices took a significant hit on Monday, with July ICE NY cocoa closing down 4.04% as improved weather conditions in West Africa bolstered crop prospects in the Ivory Coast and Ghana, the world’s largest cocoa producers. Farmers reported favorable conditions, with cocoa trees re-flowering and recent rains enhancing crop health. This decline follows a two-week low driven by demand concerns, particularly after Hershey reported a 14% drop in Q1 sales, anticipating further tariff-related cost pressures.
The bearish sentiment in cocoa markets is compounded by a rebound in U.S. cocoa inventories, which have climbed to a seven-month high. Additionally, the International Cocoa Organization’s forecast of a global cocoa surplus for the 2024/25 season adds to the downward pressure. However, quality issues in the Ivory Coast’s mid-crop may provide some price support, as processors are rejecting poor-quality beans.
Market professionals should closely monitor how these supply dynamics and consumer demand trends evolve, especially with potential tariff impacts looming over cocoa pricing.
Source: nasdaq.com