LONDON – In January, the ICCO daily price averaged US$2,921 per tonne, down by US$37 compared to the previous month’s recorded average (US$2,958), and ranged between US$2,759 and US$3,027 per tonne.
Concerns over the impact of strong Harmattan winds on cocoa production that had prevailed during the previous month, coupled with the relative weak harvest in both Côte d’Ivoire and Ghana in the first quarter of the current season, continued to be the catalyst for the upward trend in cocoa futures prices during the beginning of January.
By 12 January, cocoa futures quotations hit a three-month high in both markets, at £2,027 per tonne in London and at US$2,980 per tonne in New York.
However, from the middle of the month onwards, cocoa futures prices retreated from their upward trend, as weaker-than-expected grindings data from Europe, North America and Asia were released.
Cocoa futures continued to fall and, towards the end of the month, against a backdrop of strong weekly port arrivals in Côte d’Ivoire and the strengthening of the U.S. dollar, cocoa futures prices fell and reached a one month low, at £1,882 per tonne in London and to a one year low, at £2,692 per tonne in New York.
Also adding to the bearish tone, was the publication by the Conseil du Café-Cacao of cumulative arrivals for the October-December period, at 851,301 tonnes, a figure 47,000 tonnes higher than previously estimated by news agencies
Supply & demand situation
On the supply side, cocoa weekly arrivals to ports indicated a strong harvest in Côte d’Ivoire in January, closing the gap from the first half of the main crop.
Data from news agencies indicated that cocoa arrivals from Côte d’Ivoire reached 1,093,000 tonnes by 1 February 2015 as compared to 1,097,000 tonnes in the same period for the previous year. In Ghana, no recent data have yet been released on cocoa purchases.
However, with reports indicating a more severe impact of the Harmattan winds on the country’s cocoa production than in neighbouring countries, it looks increasingly likely that the performance of the previous season will not be met.
On the demand side, since the start of the 2014/2015 cocoa season, while prices of cocoa butter dropped, those of cocoa powder remained steady. This reflects the weak demand for cocoa recorded in recent months, as reported by the major regional cocoa associations for the fourth quarter of 2014. Indeed, the European Cocoa Association reported that cocoa grindings for Europe fell by 7.4% from the same period in the previous year, to 323,061 tonnes.
The National Confectioners’ Association reported that grindings shrank by 1.95% to 122,886 tonnes in North America compared to the same quarter in the previous year.
Another decrease came from the Cocoa Association of Asia which indicated a 17.2% fall, to 141,396 tonnes. Finally, the Commercial Association of Bahia also reported a decline by 9.5% to 55,927 tonnes in Brazil.
The members of these four associations are estimated to represent just over 60% of global processing.
Conclusion
During the month under review, cocoa futures markets were mainly influenced by weak demand and strong arrivals from West Africa.
At the end of February, the ICCO Secretariat will release its first crop forecasts for the current year in its Quarterly Bulletin of Cocoa Statistics.
Copies can be ordered from the website (www.icco.org/statistics/quarterly-bulletin-cocoa-statistics.html) or from the ICCO Secretariat
The full Cocoa Market Review (pdf file) can be found at this link.
