Cocoa Futures Diverge as Currency Moves and Supply Dynamics Drive Price Divergence

December ICE New York cocoa (CCZ24) fell 107 points, or 1.45%, while December ICE London cocoa #7 (CAZ24) rose 24 points, or 0.41%.

Cocoa prices moved mixed today, reflecting currency fluctuations. New York cocoa reversed earlier gains after the dollar index rebounded from a one‑week low, triggering profit‑taking and putting pressure on NY cocoa futures. The dollar’s recovery followed a recent decline that had supported higher cocoa prices.

In contrast, London cocoa reached a one‑week high as the British pound slipped to a two‑and‑a‑half‑month low. A weaker sterling makes sterling‑denominated cocoa more attractive, underpinning the advance.

Support for cocoa prices also comes from adverse weather in key African growing regions, where heavy rains have caused flooding, limited field access, and increased the risk of cocoa diseases.

JPMorgan forecasted a 100,000‑metric‑ton deficit for the 2024/25 marketing year, tighter than its previous neutral outlook and the consensus expectation of a modest surplus. The analyst reiterated a view that cocoa prices will remain structurally higher for an extended period, citing supply constraints and robust demand.

Global cocoa inventories continue to tighten, favoring higher prices. ICE‑monitored US port stocks have declined for 17 straight months, hitting a 19‑year low of 1,770,382 bags on Wednesday.

Harvest pressures in the Ivory Coast, the world’s largest cocoa producer, are weighing on prices. Official data showed that farmers shipped 284,633 MT of cocoa to ports between October 1 and October 27, a 26% increase from the same period last year.

Price weakness was further compounded when the Ivorian regulator Le Conseil Cafe‑Cacao raised its 2024/25 production forecast to 2.1‑2.2 MMT from a June estimate of 2.0 MMT.

Global cocoa demand signals remain mixed. North American Q3 cocoa grindings rose 12% year‑over‑year to 109,264 MT, according to the National Confectioners Association. Asian grindings increased 2.6% to 216,998 MT, per the Cocoa Association of Asia. European grindings fell 3.3% to 354,335 MT, reported by the European Cocoa Association.

Ghana’s cocoa outlook tightened after the Cocoa Board (Cocobod) cut its 2024/25 production estimate to 650,000 MT from a June forecast of 700,000 MT. A poor 2023/24 harvest shrank to a 23‑year low of 425,000 MT due to adverse weather and disease. Ghana, the second‑largest producer, begins its 2024/25 harvest in October.

Additional production from leading growers dampens price gains. Cameroon’s 2023/24 cocoa output edged up 1.2% to 266,725 MT, while Nigeria’s August exports climbed 6.8% to 14,984 MT, reflecting modest growth from the world’s fifth‑ and sixth‑largest producers, respectively.

The International Cocoa Association (ICCO) raised its 2023/24 global cocoa deficit estimate to 462,000 MT, the largest in over six decades, from May’s 439,000 MT deficit. ICCO also lowered its production projection for 2023/24 to 4.330 MMT from 4.461 MMT. The resulting stocks‑to‑grindings ratio fell to a 46‑year low of 27.4%.

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