Cocoa prices saw a modest increase on Thursday, with May ICE NY cocoa rising 0.90% and London cocoa up 0.76%. This uptick comes amid concerns that a prolonged conflict between the U.S. and Iran could disrupt cocoa supply routes through the Strait of Hormuz, impacting fertilizer availability and increasing shipping costs. Additionally, a significant short position in New York cocoa could trigger a short-covering rally, particularly as recent data shows funds have increased their net short positions to a three-year high.
However, the market faces bearish pressures from rising cocoa inventories, which have reached a 20-month high, and declining grindings in North America and Europe. Reports indicate that cocoa demand is weakening, with North American chocolate sales down 1.3% year-over-year and European grindings dropping 7.8%, the lowest for a first quarter in nearly two decades.
Market professionals should monitor the balance between supply disruptions and demand trends, as the current cocoa surplus outlook could weigh on prices despite geopolitical tensions.
Source: nasdaq.com