Cocoa prices took a significant hit on Friday, with July ICE NY cocoa dropping 4.46% and London cocoa down 2.44%, marking a retreat from recent highs. This decline follows the Ivory Coast’s increased cocoa delivery estimate for the 2025/26 season, now projected at 2.2 million metric tons, attributed to favorable weather conditions. The market is reacting to a potential surplus, particularly as ICE cocoa inventories reached a 20.5-month high.
The bearish sentiment is compounded by mixed demand signals; while chocolate sales from major producers like Hershey and Mondelez remain steady, overall cocoa grindings in North America and Europe have declined. Additionally, the expected emergence of El Niño poses risks to West African cocoa production, although recent data shows stable supplies from the Ivory Coast.
Market professionals should note that while short-term price pressures exist due to abundant supplies, ongoing weather concerns and reduced production forecasts from Nigeria could create volatility in cocoa prices moving forward.
Source: nasdaq.com