Abundant cocoa supplies in the largest cocoa-growing country are undercutting prices after the Cote d’Ivoire government reported that its cocoa farmers sent a cumulative 2.41 MMT of cocoa to Ivory Coast ports from 1 October to 21 August, unchanged year-on-year.
Barchart.com also reported that in ‘another bearish factor’, cocoa stocks held in London ICE-monitored port warehouses rose this week to a 2-1/4 month high of 5,751,961 bags.
In its latest market report, the International Cocoa Organisation (ICCO) said cocoa demand for Q2 has been mixed.
The Cocoa Association of Asia (CCA) reported in July that Q2 Asia cocoa grindings rose +3.6% y/y to 228,895 MT, a new record for the quarter and the second-highest grind in the history of the CCA.
Conversely, the European Cocoa Association on 20 July reported that European Q2 cocoa grindings fell -2.5% q/q to 364,081 MT.
The National Confectioners Association on 22 July reported that Q2 North American cocoa grindings fell -6.3% y/y to 115,899 MT.
“Currently, the overall increase in the demand for cocoa and the anticipated supply deficit for the 2021-22 season do not seem to be sufficient to counterbalance the effects of the current macroeconomic parameters,” it said in its report.
Weather conditions
As previously reported by ConfectioneryNews, a lack of fertilizer and weather conditions for cocoa farmers in West Africa risks undercutting next year's cocoa yields in Cote d’Ivoire and Ghana as the war in Ukraine has limited Russian exports of potash and other fertilizers worldwide.
Cote d’Ivoire is in its rainy season and reports from the country suggest cocoa farmers welcomed light rain last week, as they prepare to harvest the main October-to-March crop.
The farmers told local media that soil moisture remained high and the dryer conditions would help prevent plant disease but said more rain and sun would be needed in the next two months to boost the size and quality of the main crop.
The mid-crop is finishing strong and the first beans of the main crop should be available by mid-September, but the quality of the beans will depend on the weather next month, they told Reuters.