Cocoa prices have recently come under pressure as supply risks diminish, with the Ivory Coast’s cocoa harvest now projected to reach between 2.1 and 2.2 million tons, significantly higher than earlier estimates of 1.8 million tons. This increase in supply is reflected in a 1.3% rise in cocoa arrivals at ports compared to last year, suggesting that the market’s previous assumptions about tight supply conditions may be overly cautious.
Despite the supply increase, tensions among farmers due to unsold cocoa inventories persist, indicating potential challenges in demand at current price levels. However, processing data reveals that cocoa grindings in the Ivory Coast surged by 22% year-over-year in April, underscoring a resilient demand for cocoa and chocolate products. The market remains volatile, with recent U.S. dollar weakness prompting hedge funds to engage in aggressive short-covering.
Market professionals should note that while supply dynamics are shifting, the cocoa market’s volatility indicates that price stabilization may take time, necessitating close monitoring of both supply developments and demand trends.
Source: xtb.com