Cocoa prices rebound 12% from 2-year lows amid ICCO’s surprise surplus outlook

Cocoa prices have demonstrated a significant rebound at the start of the week, successfully continuing a recovery after a sharp decline that saw them hit their lowest levels in nearly two years just a week ago. 

The futures contract traded on the New York market has climbed back up to $5,550 per ton, while the London contract is now trading at almost GBP 4,100 per ton. 

This upward momentum represents a rise of 12% from the recent lows touched in both markets. 

However, Commerzbank AG analysts believe it is a case for caution for investors. 

“It is not unusual for a counter-movement to occur after a prolonged decline. It is therefore still too early to speak of a trend reversal,” commented Carsten Fritsch, commodity analyst at Commerzbank AG, suggesting that the recent price jump might be a temporary correction rather than a fundamental shift in market dynamics. 

ICCO report challenges market expectations

This cautious sentiment is partly supported by ongoing data regarding supply from the world’s largest producer. 

Commerzbank’s Lambrecht noted:

Data on cocoa arrivals at ports in the Ivory Coast continue to suggest a good main harvest in the most important producing country.

Exporters estimate that a substantial 100,000 tons of cocoa were delivered to the ports just last week, according to Commerzbank.

A key development, which influenced recent market activity, was the release of official supply and demand estimates by the International Cocoa Organisation (ICCO) on Friday.

For the first time in nine months, the ICCO published its market balance for the most recent crop year, 2024/25, which concluded two months ago.

The findings presented a notable discrepancy with prior market sentiment.

According to the ICCO’s figures, the global cocoa market concluded the 2024/25 crop year with a supply surplus of 49,000 tons. 

This surplus resulted from an estimated 7.6% rise in supply compared to the previous year, coupled with a 4.3% fall in grinding (a measure of demand).

Surprise surplus eases deficit concerns

This reported surplus of 49,000 tons came as a surprise to many market participants. 

A Reuters survey of market participants had indicated an expectation of a surplus twice as high at the end of the crop year in September. 

More significantly, the ICCO’s own forecast back in February had projected a much larger surplus of 142 thousand tons.

The lower-than-expected surplus suggests that the market has not eased as much as previously anticipated, especially following the record deficit of 489,000 tons recorded in the preceding crop year. 

Lambrecht said:

The sharp drop in prices in recent months may therefore have been exaggerated.

While port arrivals in the Ivory Coast still indicate robust supply, the official market balance data introduces an element of uncertainty regarding the actual degree of market oversupply. 

The coming weeks will be critical in determining if the current price recovery has the fundamental support needed to evolve into a sustained uptrend.

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