Cocoa Futures Ease as Market Consolidates

Cocoa futures fell to below $3,300 per tonne, continuing a consolidation following three-week highs of nearly $3,450 on March 10, which were driven by news of large exports and geopolitical concerns. According to Reuters, local cocoa mills in Ivory Coast acquired more than 400,000 tons of export contracts within ten days of purchase resumption, signaling renewed market activity as the industry takes advantage of recent price declines. Despite this, market fundamentals remain pressured by weak demand and ample global supply. ICE certified inventories rose again, reaching a 7-month high of 2,228,827 bags as of March 11, with dealers noting that this still reflects a cautious demand from the global industry. Meanwhile, top producer Ivory Coast is is considering reforming its commodity trading system to bring the prices paid to producers more in line with international prices, in response to a sharp drop in global prices and difficulties in selling the product.

Cocoa decreased 5.08% to 3254.72 USD/T

Cocoa futures rose toward $3,400 per tonne, reaching the highest level since February 17, as ongoing geopolitical tensions in the Middle East sparked short covering. Concerns grew that the Iran conflict and related disruptions in the Strait of Hormuz may raise shipping costs and curb cocoa supplies. Market fundamentals, however, remain shaped by ample supply and soft demand. Prices have declined significantly from a peak of nearly $12,220 in April 2024, as favorable weather supported a recovery in output in West Africa’s top producers, Ivory Coast and Ghana. Meanwhile, slowing global demand has accelerated cocoa stockpile accumulation, pushing key producers into crisis. To align with falling international prices, both the Ivory Coast and Ghana cut payments to farmers, many of whom are still waiting for settlements on stocks already sold to the government. Weak demand continues to boost supplies, with ICE cocoa inventories rising again to around 2,204,098 bags by March 6.