Cocoa prices climbed sharply on Tuesday, with London cocoa reaching a four-month high, driven by fears of unfavorable growing conditions in West Africa. December ICE New York cocoa rose by 2.15%, while London cocoa gained 3.50%.
The rise follows a report from Maxar Technologies predicting dry weather in West Africa, which could negatively affect soil moisture levels and disrupt the flowering of the region’s mid-year cocoa crop. Key producing countries like Ghana and Nigeria are experiencing hot and dry conditions, while heavy rains in the Ivory Coast have caused flooding, increased disease risk, and lowered bean quality. Recent beans from the Ivory Coast, the world’s largest cocoa producer, were noted to have higher bean counts, signaling reduced quality.
Global cocoa stockpiles are also at their lowest in 19 years, further supporting price increases. However, Monday saw a temporary dip in prices as concerns over European Union deforestation regulations eased, following a delay in new trading contract rules by the Intercontinental Exchange until the end of 2025.
Despite these challenges, the Ivory Coast reported a 32% year-on-year increase in cocoa shipments for the current harvest season. Meanwhile, mixed global demand data showed North American and Asian cocoa grindings increased in Q3 2024, but European grindings dropped by 3.3%.
On a global scale, the International Cocoa Organization (ICCO) recently revised its 2023/24 deficit estimate to 462,000 metric tons, the largest shortfall in over 60 years, citing lower production forecasts.
The combination of weather-related challenges, supply deficits, and fluctuating demand continues to drive volatility in cocoa markets, with ongoing concerns over the sustainability of supply from West African producers.
