Tighter stocks push cocao price

The cocao price has shown a clear recovery in recent weeks. Improved American demand has led to further scarcity. Meanwhile, the price has almost halved over the past year. The cocao prices have clearly recovered from their recent low at the end of November. In London, the ICE cocao price rose in recent weeks to $5,871.18 on January 5. Since the market's low point, there has been a recovery of 22.3%. In New York, the price increased during the same period to $6,077. That is an increase of 21.7% since the end of November. Market commentary worldwide indicates that cocoa stocks are under pressure globally. Especially in the United States, the commodity is scarce. The cocoa stocks monitored by ICE in American ports have fallen to the lowest level in nine and a half months, with only 1,626,105 bags in storage. This is a result of stronger demand in the country. While cocao grindings worldwide continued to decline, it was already evident in October that grinding activity in the United States rose by 3.2% compared to a year earlier. Partly due to the strong American demand, the global supply has come under further pressure. The International Cocao Organization has significantly downgraded its surplus forecast for 2024/25 to 49,000 tons and has also lowered global production expectations. Rabobank has also tempered its surplus forecast for 2025/26, indicating ongoing tightness in the medium term. Additionally, Nigeria, the fifth largest cocoa producer in the world, is expecting a production decline of 11% in 2025/26. This partly offsets the better harvest expectations in the main harvest area of West Africa. Decline over 2025 Due to the recent recovery, it is easy to forget how much the cocao price has fallen this year. Compared to a year ago, the cocao price in New York was 46.6% lower on January 6, while the price in London decreased by 51.8%. The main reason for this remains the favorable growing weather in West Africa, which gives the market confidence in a significant recovery of global supply. Another important factor is the weak global demand. Cocoa grindings in Asia fell by 17% year-on-year in the third quarter, the lowest level in nine years, while Europe showed a decline of 4.8%, the weakest third quarter in ten years. North America recorded an increase, but this is partly distorted by changes in reporting. At the same time, a better outlook for supply in 2026 during the second half of the year put additional pressure on prices. The European Union has postponed the implementation of the deforestation regulation (EUDR) by a year, allowing cocoa from regions at risk of deforestation to remain available for now and preventing additional tightness due to this legislation. The outlook on the supply side has also clearly improved. In Ivory Coast and Ghana, favorable weather has led to good flowering and pod formation. Initial signals from the fields are also positive: according to Mondelez, the recent count of cocao pods in West Africa is 7% above the five-year average and clearly higher than last year. In Ivory Coast, the main harvest has now started, with farmers optimistic about both the volumes and the quality. These developments temper the immediate concerns about supply.