March ICE NY cocoa (CCH25) today is down -174 (-1.88%), and March ICE London cocoa #7 (CAH25) is down -194 (-2.54%).

Cocoa prices today are moderately lower as an increase in cocoa supplies from Nigeria, the world's sixth-largest cocoa producer, sparked long liquidation in cocoa futures.  Nigeria's Oct cocoa exports rose +15% y/y to 20,508 MT.  Losses in London cocoa accelerated today after the British pound (^GBPUSD) rallied to a 1-week high, undercutting cocoa priced in sterling.

Cocoa prices have moved higher over the past week due to uncertainty over future cocoa supplies.  Last Friday, NY cocoa posted a 2-1/2 month high, and London cocoa posted a 4-1/4 month high as recent heavy rains in the Ivory Coast led to reports of high mortality rates of cocoa buds on trees because of the heavy rain.

Adverse weather in West Africa has pushed cocoa prices sharply higher.  Heavy rains in the Ivory Coast flooded fields, increased disease risk, and affected crop quality.  Recently harvested cocoa beans from the Ivory Coast signal lower quality, with counts of about 105 beans per 100 grams.  The Ivory Coast cocoa regulator allows exporters to buy bean counts of 80 to 100 or slightly more for every 100 grams, with the best quality cocoa having the lower count.  

Shrinking global cocoa stockpiles are bullish for prices.  ICE-monitored cocoa inventories held in US ports have been trending lower for the past 1-1/2 years and fell to a 19-year low Tuesday of 1,571,470 bags.

An increase in supplies from the Ivory Coast, the world's largest cocoa producer, is bearish for prices.   Monday's government data showed that Ivory Coast farmers shipped 642,500 MT of cocoa to ports from October 1 to November 24, up +34% from 415,523 MT shipped the same time last year.  Meanwhile, the Ivory Coast regulator Le Conseil Cafe-Cacao on October 18 raised its Ivory Coast 2024/25 cocoa production estimate to a range of 2.1-2.2 MMT from a June forecast of 2.0 MMT.

Recent global cocoa demand news was mixed.  The National Confectioners Association on October 17 reported that North American Q3 cocoa grindings rose +12% y/y to 109,264 MT.  Also, the Cocoa Association of Asia reported that Q3 Asian cocoa grinding rose +2.6% y/y to 216,998 MT.  However, the European Cocoa Association reported that European Q3 cocoa grindings fell -3.3% y/y to 354,335 MT.  

Cocoa found support after Ghana's Cocoa Board (Cocobod) on August 20 cut its 2024/25 Ghana cocoa production estimate to 650,000 MT from a June forecast of 700,000 MT.  Due to bad weather and crop disease, Ghana's 2023/24 coca harvest sank to a 23-year low of 425,000 MT.  Ghana is the world's second-biggest cocoa producer, and its 2024/25 cocoa harvest begins in October.

In a bullish factor, the International Cocoa Association (ICCO) on August 30 raised its 2023/24 global cocoa deficit estimate to -462,000 MT from May's -439,000 MT, the largest deficit in over 60 years.  ICCO also cut its 2023/24 cocoa production estimate to 4.330 MMT from May's 4.461 MMT.  ICCO projected a 2023/24 global cocoa stocks/grindings ratio of a 46-year low of 27.4%.