Cocoa Prices Plummet Amidst Reduced Production and Quality Concerns
Cocoa prices have plummeted this week, with both New York and London cocoa futures hitting multi-month lows. This downturn comes amidst projections of reduced production in Nigeria and quality concerns in Ivory Coast's mid-crop, while Ghana's production is expected to rise.
Nigeria's cocoa production for the 2025/26 season is forecast to drop by -11% year-on-year to 305,000 MT. Meanwhile, Ivory Coast's mid-crop production is estimated to decrease by -9% to 400,000 MT, due to quality issues. Despite this, cocoa deliveries in Ghana surged, with 50,440 MT delivered in the four weeks ending September 4, compared to just 11,000 MT in the same period last year.
Ivory Coast's cocoa exports have increased by +3.4% year-to-date, but the pace has slowed significantly from last year's +35% increase. This slowdown, coupled with an expected improvement in the Ivory Coast's main crop, could further pressure prices. However, US cocoa inventories have fallen to a 5.25-month low, providing some support for prices.
The cocoa market is grappling with a perfect storm of reduced production in key regions, quality concerns, and increased supplies from Ghana. This has led to a significant sell-off in cocoa prices, with both New York and London cocoa futures hitting multi-month lows. Chocolate manufacturers like Lindt & Sprüngli AG and Barry Callebaut AG are already feeling the pinch, with reported declines in sales and margins. The situation may worsen if high cocoa prices and tariffs dampen chocolate demand further.
