Cocoa prices experienced a significant decline on Monday, with July ICE NY cocoa dropping 5.27% and London cocoa falling 5.24%, marking a two-week low. This downturn follows a brief surge to 3.75-month highs, driven by concerns over potential El Niño weather patterns affecting West African cocoa production. However, the Ivory Coast’s revised cocoa delivery estimate of 2.2 million metric tons for the 2025/26 season, up from previous projections, has shifted market sentiment towards an outlook of abundant supplies.
The bearish trend in cocoa prices is further supported by rising inventories and mixed demand signals. While North American and European cocoa grindings have seen declines, Asian demand has unexpectedly increased. Additionally, logistical challenges from the prolonged closure of the Strait of Hormuz are raising costs for cocoa importers, potentially adding upward pressure on prices.
Market professionals should note that while supply forecasts are improving, weak demand trends could continue to weigh on cocoa prices. The interplay between supply adjustments and consumer demand will be critical to watch in the coming months.
Source: nasdaq.com