Cocoa Prices Soar as the ICCO Forecasts a Wider Deficit

On Monday, cocoa prices rose after the International Cocoa Organization (ICCO) lifted its global deficit projection for the current crop year.

US cocoa July futures advanced by 4.76% to $9,775.00 per metric ton (MT) on June 03, extending Friday’s gains. Moreover, Industry watchers predict a 2.56% surge to $10,025.00 per MT in the following market session.

The sweet commodity rallied after the ICCO revised its predicted deficit for 2023/24 upward to 439,000.00 MT. This marked a 17.38% increase from the February estimate of 374,000.00 MT and a 493.24% year-over-year (YoY) jump from 74,000.00 MT in 2022/23.

In addition, the inter-governmental organization boosted its 2023/24 cocoa grindings guidance by 1.67% to 4.86 MMT from 4.78 MT. However, the modified forecast still falls 2.80% YoY from the total grindings of 5.00 MT in the previous crop year.

Similarly, the ICCO expanded its projected total global cocoa production by 0.22% to 4.46 MMT from its previous prediction of 4.45 MMT. Despite the alteration, the estimate still represents a 9.90% annualized drop from 4.95 MT in 2022/23.

Lastly, Intercontinental Exchange-monitored cocoa inventories in US ports slumped to a 3-1/4 year low of 3.62 million bags last Friday. According to market specialists, this indicates that demand remains strong despite prices growing at an unprecedented rate since last year.

ICCO Expects Cocoa Prices to Remain High All Year

The ICCO stressed that it sees cocoa prices staying elevated next year amid continued supply shortages from West Africa. Adverse weather conditions, aging cacao trees, and outbreaks of untreatable crop diseases limited yield in key producers Ivory Coast and Ghana.

Ivory Coast reported port shipments of 1.50 MMT from October 01 to June 02, 30.00% lower than the same period last year. Furthermore, the top producer expects total output for 2023/24 to deteriorate by 21.50% YoY to an 8-year low of 1.75 MMT.

Meanwhile, Ghana said last month that it expects the total yield to slump to a 22-year low of 423.750.00 MT. This would be less than half of the country’s initial estimate at the beginning of the current crop year.

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