Cocoa stocks likely to “reassure” a very nervous market

2024-01-28 23:08:10

Global cocoa stocks have fallen, but not as much as some expected: this is shown by the latest figures released by the International Cocoa Organization. News that should calm a very nervous market.

Cocoa prices have reached such a level that the slightest news is awaited with excitement. The latest information is the review of the state of world stocks announced by the International Cocoa Organization (ICCO). It was made public at the end of last week and ultimately almost appeased market players.

Stocks assessed on the basis of figures established last September, i.e. at the end of the 2022/2023 campaign, just before the start of the new harvest, would, according to the ICCO, be 1.69 million tonnes, or approximately 100,000 tonnes lower than the previous year, therefore decreasing reserves, but an industry expert confides that he expected much worse.

80% drop

These stocks are mostly located in Europe, in the ports of Antwerp, Hamburg and Amsterdam. If they fell little, this means that while prices were soaring last year, manufacturers continued to buy. Sign “thatthey may not be very flexible and can ill afford to have less inventory” comments one of our interlocutors.

What impact will the announcement of these available volumes now have on a very nervous market? Still difficult to say. The prices of certain contracts have increased by 80% in one year and are still not decreasing even if some traders believed in a stabilization at the start of the year.

A third year of deficit?

The main driver of this increase is the fall in the harvest in West Africa, a decline linked to a combination of factors, such as climate and the so-called swollen shoot disease. However, it will be necessary to wait until March for the International Cocoa Organization to be able to disseminate its estimates in Ivory Coast and Ghana, the two leading global suppliers of beans.

According to sources, this harvest could drop by a quarter this year. Which would announce, if this were indeed the case, a third year of deficit, after years of surplus on the market.