Prolonged liquidation pressure puts pressure on cocoa prices
May ICE NY Cocoa (CCK24) Up +79 (+0.83%) this morning, May ICE London Cocoa #7 (CAK24) fell by -130 (-1.65%).
Cocoa prices were mixed this morning, extending Wednesday's steep decline to a one-and-a-half week low. A long-term cocoa liquidation occurred on Wednesday and continues today after the Ivorian government increased farm prices for cocoa producers for middle-grown beans by 50%, with Ghana considering similar measures. reported Bloomberg. The government's increase in the price it pays cocoa farmers could encourage hoarding producers to send more beans to market, potentially temporarily easing the supply crunch.
London Cocoa's decline accelerated today as the British pound (^GBPUSD) rose to a two-week high. The strength of the pound makes cocoa cheaper in pound terms.
On Tuesday, New York cocoa and London cocoa rose to record highs on concerns about shrinking global cocoa supplies. There are growing concerns that cocoa suppliers in West Africa will default on supply contracts, and with supplies limited, global cocoa crushers are expected to make payments on the spot market to secure cocoa supplies this year. ing. Cocoa prices have more than doubled (+143%) since the beginning of the year due to the worst supply shortage in the past 40 years.
Declining cocoa production in Ivory Coast, the world's largest producer, is the main bullish factor for cocoa prices. Ivorian farmers shipped 1.3 MMT of cocoa to ports between October 1 and March 31, a 27.8% decrease compared to the same period last year, according to government data on Tuesday. The Trader Ecom Agroindustrial project forecasts Ivory Coast's cocoa production in 2023/24, which ends in September, to be -21.5% year-on-year at 1.75 MMT, an eight-year low.
The Cocoa Board of Ghana (Cocobod) said last Monday that Ghana's 2023/24 cocoa harvest was expected to drop from 422,500,000 tonnes to 420,000 tonnes, half of Ghana's original forecast, due to extreme weather and epidemics that have drastically reduced cocoa crops. It was announced that the amount would remain at 5,000 tons.
Concerns about West Africa's intermediate crops (the smaller of the two harvests a year) are also contributing to tight cocoa supplies. Ghana's mid-term harvest forecast, starting in July, has been lowered to 25,000 tonnes from a previous estimate of 150,000 tonnes. Ivory Coast's cocoa regulator also announced on March 7 that it expects Ivory Coast's mid-season crop, which officially begins in April, to be 400,000 tonnes, down 33% from 600,000 tonnes last year. Additionally, Nigeria's medium-term crop forecast has been lowered to 76,500 tonnes from a previous estimate of 90,000 tonnes.
Small-scale cocoa exports from Nigeria, the world's fifth-largest cocoa producer, have declined in price as Nigeria's cocoa exports in February fell -18% year-on-year to 26,103 tonnes. The market is bullish.
Another bullish factor was that ICE-supervised cocoa stocks held at U.S. ports fell to a three-year low of 4,054,349 bags on March 18.
Cocoa gained support on February 29, when the International Cocoa Organization (ICCO) predicted that the global cocoa shortage in 2023/24 would widen from -74,000 tonnes in 2022/23 to -374,000 tonnes. ICCO predicts that global cocoa production in 2023/24 will decline by -11% year-on-year to 4.45 MMT, and global cocoa milling will decline by nearly -5%, with the stock-to-mill ratio in 2023/24 at its lowest. I predict that it will be. More than 40 years later.
Unfavorable growing conditions and crop diseases on West African farms over the past year have reduced cocoa production and accelerated the parabolic rise in cocoa prices. The global cocoa shortage is expected to continue until 2023/24 as current production is insufficient to meet demand. The current El Niño phenomenon is also supporting cocoa prices, after the 2016 El Niño event caused drought and sent cocoa prices to a 12-year high.
On January 25, Ivory Coast's cocoa regulator, Le Conseil Café Cocoa, suspended pre-sales of cocoa for the 2024/25 season. Regulators have suspended futures sales until they get a clear picture of Ivory Coast's expected cocoa production. The outage could further disrupt the region's cocoa supplies, which could further heighten supply concerns.
Record-high cocoa prices are starting to suppress global demand. On January 12, the National Confectionery Association reported that North American cocoa milling volume decreased -3.0% year-over-year to 103,971 tons in the fourth quarter. The Asia Cocoa Association also reported that Asia's cocoa crushing volume in the fourth quarter decreased by -8.5% year-on-year to 211,202 tons. Finally, the European Cocoa Association reported that cocoa crushing volumes in Europe decreased by -2.5% year-on-year to 350,739 tonnes in the fourth quarter.
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On the date of publication, rich asplund I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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May ICE NY Cocoa (CCK24) Up +79 (+0.83%) this morning, May ICE London Cocoa #7 (CAK24) fell by -130 (-1.65%).Cocoa prices were mixed this morning, extending Wednesday's steep decline to a one-and-a-half week low. A long-term cocoa liquidation occurred on Wednesday and continues today after the Ivorian government increased farm prices for cocoa producers for middle-grown beans by 50%, with Ghana considering similar measures. reported Bloomberg. The government's increase in the price it pays cocoa farmers could encourage hoarding producers to send more beans to market, potentially temporarily easing the supply crunch.
London Cocoa's decline accelerated today as the British pound (^GBPUSD) rose to a two-week high. The strength of the pound makes cocoa cheaper in pound terms.On Tuesday, New York cocoa and London cocoa rose to record highs on concerns about shrinking global cocoa supplies. There are growing concerns that cocoa suppliers in West Africa will default on supply contracts, and with supplies limited, global cocoa crushers are expected to make payments on the spot market to secure cocoa supplies this year. ing. Cocoa prices have more than doubled (+143%) since the beginning of the year due to the worst supply shortage in the past 40 years.Declining cocoa production in Ivory Coast, the world's largest producer, is the main bullish factor for cocoa prices. Ivorian farmers shipped 1.3 MMT of cocoa to ports between October 1 and March 31, a 27.8% decrease compared to the same period last year, according to government data on Tuesday. The Trader Ecom Agroindustrial project forecasts Ivory Coast's cocoa production in 2023/24, which ends in September, to be -21.5% year-on-year at 1.75 MMT, an eight-year low. The Cocoa Board of Ghana (Cocobod) said last Monday that Ghana's 2023/24 cocoa harvest was expected to drop from 422,500,000 tonnes to 420,000 tonnes, half of Ghana's original forecast, due to extreme weather and epidemics that have drastically reduced cocoa crops. It was announced that the amount would remain at 5,000 tons.Concerns about West Africa's intermediate crops (the smaller of the two harvests a year) are also contributing to tight cocoa supplies. Ghana's mid-term harvest forecast, starting in July, has been lowered to 25,000 tonnes from a previous estimate of 150,000 tonnes. Ivory Coast's cocoa regulator also announced on March 7 that it expects Ivory Coast's mid-season crop, which officially begins in April, to be 400,000 tonnes, down 33% from 600,000 tonnes last year. Additionally, Nigeria's medium-term crop forecast has been lowered to 76,500 tonnes from a previous estimate of 90,000 tonnes.
Small-scale cocoa exports from Nigeria, the world's fifth-largest cocoa producer, have declined in price as Nigeria's cocoa exports in February fell -18% year-on-year to 26,103 tonnes. The market is bullish.Another bullish factor was that ICE-supervised cocoa stocks held at U.S. ports fell to a three-year low of 4,054,349 bags on March 18.Cocoa gained support on February 29, when the International Cocoa Organization (ICCO) predicted that the global cocoa shortage in 2023/24 would widen from -74,000 tonnes in 2022/23 to -374,000 tonnes. ICCO predicts that global cocoa production in 2023/24 will decline by -11% year-on-year to 4.45 MMT, and global cocoa milling will decline by nearly -5%, with the stock-to-mill ratio in 2023/24 at its lowest. I predict that it will be. More than 40 years later. Unfavorable growing conditions and crop diseases on West African farms over the past year have reduced cocoa production and accelerated the parabolic rise in cocoa prices. The global cocoa shortage is expected to continue until 2023/24 as current production is insufficient to meet demand. The current El Niño phenomenon is also supporting cocoa prices, after the 2016 El Niño event caused drought and sent cocoa prices to a 12-year high.On January 25, Ivory Coast's cocoa regulator, Le Conseil Café Cocoa, suspended pre-sales of cocoa for the 2024/25 season. Regulators have suspended futures sales until they get a clear picture of Ivory Coast's expected cocoa production. The outage could further disrupt the region's cocoa supplies, which could further heighten supply concerns.
Record-high cocoa prices are starting to suppress global demand. On January 12, the National Confectionery Association reported that North American cocoa milling volume decreased -3.0% year-over-year to 103,971 tons in the fourth quarter. The Asia Cocoa Association also reported that Asia's cocoa crushing volume in the fourth quarter decreased by -8.5% year-on-year to 211,202 tons. Finally, the European Cocoa Association reported that cocoa crushing volumes in Europe decreased by -2.5% year-on-year to 350,739 tonnes in the fourth quarter.
more cocoa news from bar chart
On the date of publication, rich asplund I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
https://www.nasdaq.com/articles/cocoa-prices-weighed-down-by-long-liquidation-pressures Prolonged liquidation pressure puts pressure on cocoa prices
