Dubai – Qahwa Worlf

Cocoa futures rose sharply on Wednesday, reaching their highest levels in a month. March ICE New York cocoa (CCH26) closed up +339 points (+5.76%), while March ICE London cocoa #7 (CAH26) ended the session up +239 points (+5.62%).

The rally comes as the global cocoa supply outlook tightens. On November 28, the International Cocoa Organization (ICCO) revised its 2024/25 surplus forecast downward to 49,000 MT from an earlier 142,000 MT, and reduced its production estimate to 4.69 MMT from 4.84 MMT. Similarly, Rabobank lowered its 2025/26 global cocoa surplus projection to 250,000 MT from 328,000 MT.

Declining cocoa inventories also support prices. ICE-monitored stocks in U.S. ports fell to 1,664,563 bags on Wednesday, an 8.75-month low.

Port arrivals in Ivory Coast, the world’s largest cocoa producer, remain below last year’s pace. Government figures show that from October 1 to December 7, 804,288 MT of cocoa reached ports, down 1.8% from 819,425 MT a year earlier.

Cocoa futures could receive additional support as NY cocoa will be included in the Bloomberg Commodity Index (BCOM) in January, potentially attracting up to $2 billion of passive fund purchases, according to Citigroup.

Weather conditions in West Africa remain generally favorable. In Ivory Coast, a combination of rain and sun is aiding tree bloom, while in Ghana, consistent rainfall is supporting pod growth ahead of the harmattan season, which could boost supply and weigh on prices.

Earlier, abundant supply expectations had pressured prices. On November 19, cocoa fell to 1.75-year lows amid expectations of a strong West African crop. Reports indicate that trees in Ivory Coast and Ghana are developing well, with favorable weather improving pod maturation.

Mondelez noted that the latest pod count in West Africa is 7% above the five-year average, significantly exceeding last year’s crop. The main crop harvest in Ivory Coast has begun, with farmers optimistic about its quality.

Political and trade developments have also influenced prices. On November 26, the European Parliament approved a 1-year delay for the EU’s deforestation regulation (EUDR), allowing continued imports of cocoa from regions with deforestation risks. Earlier, on November 14, the U.S. administration removed reciprocal tariffs on commodities including cocoa and lifted a 40% tariff on Brazilian food imports.

Weak demand remains a factor. Hershey reported disappointing chocolate sales during Halloween, which accounts for nearly 18% of annual U.S. candy sales. The Cocoa Association of Asia reported Q3 cocoa grindings fell 17% y/y to 183,413 MT, the lowest in nine years. European grindings fell 4.8% y/y to 337,353 MT, the lowest third-quarter figure in a decade. North American Q3 grindings rose 3.2% y/y to 112,784 MT, but new reporting companies may have skewed the data. Chocolate candy sales in North America declined more than 21% over 13 weeks ending September 7, per Circana.

Lower production in Nigeria is also supporting prices. The Nigerian Cocoa Association expects 2025/26 output to drop 11% y/y to 305,000 MT from 344,000 MT. September cocoa exports were unchanged y/y at 14,511 MT.

Historically, ICCO reported a record global cocoa deficit in 2023/24 of -494,000 MT, the largest in over 60 years, with production down 12.9% y/y to 4.368 MMT and stocks-to-grindings ratio at a 46-year low of 27.0%. For 2024/25, ICCO forecasts a modest surplus of 49,000 MT and a 7.4% y/y rise in global production to 4.69 MMT.