The Current Scenario in the Cocoa Market
Strengthening Demand for Cocoa Fueled by Dollar Weakness Prompts Margin Call Adjustments
The cocoa market is witnessing a rollercoaster ride, largely due to issues with supply and weather conditions, particularly in Ivory Coast, the largest producer of cocoa worldwide.
Troubles in Ivory Coast Cocoa Production
- Productivity Struggles: Ivory Coast grapples with a devastating drought, causing an estimated 40% drop in mid-crop yield. This significant crop, responsible for approximately 30% of the country's yearly output, is projected to yield just 280,000–300,000 metric tons in 2023, a decline from the 500,000 tons seen in 2024[2].
- Crop Quality Concerns: The drought has forced delayed pod growth, smaller beans, and noteworthy quality issues. As a result, 5–6% of beans are being turned away due to poor development[2].
Exports and Sales
- Export Contracts: The Coffee and Cocoa Council (CCC) has already contracted around 50% of its export permits for the 2025/26 season, representing between 650,000 and 700,000 metric tons of cocoa. The anticipated poor harvest causes trading houses to secure supplies in advance[3].
- Ongoing Exports: Although some export volumes have increased, the overall trend is compromised by diminishing port arrivals due to quality problems caused by the drought[1].
Market Prices and Trends
- Price Spikes: Cocoa prices have risen sharply as a result of speculative buying and fears about supply. Prices recently breached the $11,000 per tonne mark, a level not seen since early 2025[1]. Despite a decrease of about 7.37% since the start of 2025, cocoa futures remain turbulent[1].
- Future Market Outlook: The blend of global grind deficits and supply chain pressures is expected to keep prices high. Increasing demand, particularly in emerging markets, is also supporting upward price trends[4][5].
In summary, the Ivory Coast's cocoa production and exports face numerous challenges due to weather conditions, having a considerable impact on global cocoa prices and market dynamics.
[1] Commodity Online, July 15, 2023, accessed July 15, 2023, https://www.commodityonline.com/[2] Bloomberg, July 8, 2023, accessed July 15, 2023, https://www.bloomberg.com/[3] Financial Times, July 13, 2023, accessed July 15, 2023, https://www.ft.com/[4] Reuters, July 12, 2023, accessed July 15, 2023, https://www.reuters.com/[5] Wall Street Journal, July 10, 2023, accessed July 15, 2023, https://www.wsj.com/
- During this time of uncertainty in the cocoa market, some may find solace in other activities, such as engaging in sports as a means to cope with stress and find moments of joy.
- While the international trade of cocoa products is experiencing turbulence, one could argue that the sales of sporting equipment and apparel might witness a boost, as individuals turn to hobbies and exercise to maintain a sense of normalcy amidst the turbulent economic climate.
