Cocoa prices experienced a decline on Thursday, with December ICE NY cocoa closing down 0.77% and December ICE London cocoa down 0.22%. This retreat follows a week of gains, as a stronger dollar prompted long liquidation in cocoa futures. However, losses in London were mitigated by a weaker British pound, which benefits cocoa priced in sterling. The market is also grappling with adverse weather conditions in Africa, leading to supply disruptions and heightened disease risks.
The outlook for cocoa remains complex, with JPMorgan projecting a deficit of 100,000 metric tons for the 2024/25 marketing year, a shift from earlier forecasts of a surplus. This is compounded by dwindling global cocoa inventories, which recently hit a 19-year low. Mixed demand signals are emerging, with North American and Asian cocoa grindings showing growth, while European grindings have declined.
Market professionals should note the potential for structurally higher cocoa prices due to ongoing supply constraints and firm demand, despite recent production increases in key regions like Cameroon and Nigeria.
Source: nasdaq.com