Cocoa prices declined on Friday, with July ICE NY cocoa closing down 0.78% and May ICE London cocoa down 0.51%, driven by weakening demand signals. Recent data from Circana indicated a 1.3% drop in North American chocolate candy sales over the past 13 weeks, while Easter sales fell approximately 5% year-over-year. Coupled with a rise in ICE cocoa inventories to a 20-month high, these factors have contributed to a bearish outlook for cocoa prices.
The decrease in demand is further highlighted by significant declines in cocoa grindings, with North American Q1 grindings down 3.8% year-over-year and European grindings falling 7.8%, the lowest in 17 years. Conversely, Asian grindings showed unexpected growth, but overall supply remains ample, particularly from the Ivory Coast, which has shipped 1.48 million metric tons this marketing year.
Market professionals should note the potential for short-covering rallies, as funds have increased their short positions in NY cocoa to the highest level in over three years. Additionally, ongoing drought conditions in key producing regions could impact future supply, suggesting a complex interplay of factors that could influence cocoa prices in the coming months.
Source: nasdaq.com