Earlier in the week NY cocoa rose to a two-year high, and London cocoa posted a 2-3/4 month high after the International Cocoa Organization (ICCO) forecasted global 2022-23 cocoa stockpiles would fall -3.5% y/y to 1.653 MMT.
“A growing number of uncertainties including the current global macroeconomic outlook, the effect of climate change and diseases are likely to have an impact on cocoa supply and demand,” it said in its Quarterly Bulletin of Cocoa Statistics (February 2023).
“As such, the 2022-23 season is anticipated to result in a limited supply deficit while demand is envisaged to be subdued. The expectation of a supply deficit has also been compounded with weather variations, especially in West Africa.
“Compared to the 2021-22 season, global cocoa supply is anticipated to rise by 4% to 5.017 million tonnes. Global cocoa demand is projected to decrease by less than 1% to 5.027 million tonnes.
Smaller supplies from Cote d’Ivoire are supportive of cocoa prices, barchart.com reported. Government data showed that country’s farmers sent a cumulative 1.70 MMT MT of cocoa to ports for the 2022-23 marketing year from 1 October through 26 February 26, down -2.9% y/y.
Analysts also said a decline in cocoa exports from Nigeria is favourable for prices after the Cocoa Association of Nigeria reported that Nigeria's January cocoa exports fell -5.9% y/y to 43,405 MT. Nigeria is the world's fifth-largest cocoa bean producer.
According to the ICCO, global cocoa demand remains moderate and is a negative factor for prices. In January 2023, the National Confectioners Association reported that Q4 North American cocoa grindings fell -8.1% y/y to 107,130 MT. Also, the European Cocoa Association reported that European Q4 cocoa grindings fell -1.7% y/y to 359,577 MT. And on 18 January, the Cocoa Association of Asia reported that Asia Q4 cocoa grindings fell -0.2% y/y to 230,806 MT.
Barchart.com said cocoa also has support from recent reports that some Cote d’Ivoire cocoa exporters are close to defaulting on their contracts due to a lack of cocoa beans, with some shortage estimates as high as 150,000 tons.
According to Reuters, with more cocoa grinding being carried out locally in the country, not enough cocoa beans are available to satisfy exporters' contracts.