Cocoa prices decline on fading supply fears - ING

The cocoa market continues to sell off, with London cocoa pulling back aggressively. The nearly 11% drop yesterday has cocoa trading at its lowest level since November, ING's commodity experts Ewa Manthey and Warren Patterson note.

Global market is likely to record a supply surplus of 142kt

"The International Cocoa Organization, in its first forecast for the 2024/25 season, last week estimated that the global market is likely to record a supply surplus of 142kt. That follows three consecutive seasons of deficit. A production recovery and weaker demand -- due to higher prices -- are expected to push the market back into surplus this season."

"In its latest quarterly crop report, Australia's Bureau of Agricultural and Resource Economics and Sciences (ABARES) estimates that the winter wheat harvest, completed in January, increased by 31% year on year to 34.1mt for the 2024/25 season. That's up 7% from the previous estimate and 28% above the 10-year average."

"New South Wales and Western Australia drove the increase with production rebounding by 82% and 64%, respectively. Meanwhile, a bumper wheat harvest in the nation might boost global stockpiles, which have been hovering at lower levels amid smaller harvests in the European Union and Russia."