Cocoa prices saw a rebound on Monday, with May ICE NY cocoa closing up 0.99% and London cocoa rising 1.16%. This recovery followed a period of early losses, driven by a weaker dollar that prompted short covering in cocoa futures. Additionally, the ongoing closure of the Strait of Hormuz has increased costs for cocoa importers by raising shipping rates and fertilizer prices, further supporting cocoa prices.
Despite this uptick, the market faces significant headwinds. Recent data reveals that cocoa supplies from the Ivory Coast have increased, with shipments up 0.7% year-over-year, and ICE cocoa inventories have reached a 19.5-month high. Furthermore, demand concerns loom large, as early estimates indicate a potential 5% decline in chocolate sales this Easter, a critical time for consumption.
Market professionals should note that while short-covering may provide temporary support, the combination of rising supplies and weakening demand could pressure cocoa prices in the near term.
Source: nasdaq.com