The International Cocoa Organization (ICCO) surprised the cocoa market by projecting a global cocoa supply surplus of 142,000 tonnes for the 2024-25 marketing year, which began on October 1. The unexpected forecast, released on February 28, caused a significant reaction in the markets. On Monday, the May New York cocoa futures contract fell by 10% to $8,212 per tonne, while London cocoa futures also dropped sharply, closing at $6,567 per tonne, down nearly 11% from the previous session’s close.
The ICCO attributed the projected surplus to improved production and constrained global demand. High cocoa prices have encouraged better crop care from farmers in the Ivory Coast and Ghana, the world’s top two cocoa producers. The ICCO forecasted global cocoa production for 2024-25 at 4.84 million tonnes, representing a 7.8% increase from 4.49 million tonnes in 2023-24.
Markets react to cocoa surplus forecast
Production in the Ivory Coast is expected to reach 1.85 million tonnes this season, up from 1.67 million tonnes in 2023-24. Ghana’s production is also projected to rise to 600,000 tonnes from 530,000 tonnes a year earlier.
Conversely, global cocoa grindings, an indicator of demand, are projected to fall to 4.65 million tonnes, down 4.8% from 4.885 million tonnes in 2023-24. Back-to-back years of high input costs for cocoa users have significantly weighed on demand. Earlier this year, major markets reported a 3.2% year-over-year decline in fourth-quarter cocoa bean grind, marking the lowest level for any quarter since 2017, excluding the second quarter of 2020, which was heavily impacted by the COVID-19 pandemic.
The data from cocoa bean grind indicates a shift in demand, showing how fluctuating market conditions and production strategies are reshaping the global cocoa market.
