Cocoa prices have fallen 20% over the past month, basis ICE EU front month, as expectations for the October-March West African main crop remain optimistic. Weather conditions have been broadly supportive of production improving versus last season.
Funds extended their short position in ICE European cocoa futures last week. A Bloomberg industry poll estimates a surplus of 186,000 tonnes for the 2025/26 season, triple the 2024/25 season surplus.
Origin prices decline across regions
Cocoa bean prices at origin have moved lower over the month. Ivory Coast prices fell 16% month-on-month, while Ghana prices declined 12.4%. Higher farm gate prices in both Ivory Coast and Ghana should encourage higher arrivals as beans held back now make their way to ports, but quality remains an issue.
Grindings data and product prices
European Q3 grindings fell 4.8% versus last year. Considering some estimates had been for a double digit drop, these were reported as “better than expected”, indicating that demand did not fall quite as much as anticipated.
Cocoa powder has corrected 14.4% over the month, after spending around 6 months over the 9,000 EUR/mt mark. Cocoa butter prices fell 24% month-on-month, while cocoa mass declined 21%. The downtrend in cocoa products and stable sugar prices provides some near-term relief on ingredients cost pressures.
Market outlook
US cocoa inventories have dipped to their lowest level in nearly 6 months. With funds short there is also some additional potential for volatility should weather updates turn sour or further grindings surprise to the upside.
There has reportedly been some commercial buying around current levels, which could look very well timed in the weeks to come, should supply fall short of the current expectations.
This article is part of a more comprehensive cocoa market analysis, for the full analysis, visit: https://app.vespertool.com/market-analysis/2365