Global Cocoa Prices Surge on Supply Concerns

Cocoa prices are sharply higher, with NY Cocoa reaching a 2-week high and London Cocoa a 2.5-month high. This surge is primarily due to revised forecasts of smaller global Cocoa surpluses for 2025/26 and 2026/27 by entities like StoneX Group Inc. and Rabobank, citing risks to West African crops from an expected El Niño weather event. Consumer demand for chocolate remains resilient, as evidenced by better-than-expected earnings from The Hershey Company and Mondelez International. However, there are mixed signals on demand, with North American and European Cocoa grindings falling, as reported by the National Corn Growers Association and European Cocoa Association, while Asian grindings unexpectedly rose according to the Cocoa Association of Asia. The prolonged closure of the Strait of Hormuz is also disrupting global Cocoa supplies, increasing shipping rates and costs. Supply concerns are further exacerbated by projected production declines in Nigeria and the Ivory Coast, and drought conditions in the Ivory Coast and Ghana, despite stable current supplies from the Ivory Coast. Both Ghana and the Ivory Coast have also cut farmer pay, which could impact future production.