Analyst insights
by Steve Wateridge, Vice President, Analysis, Soft Commodities, Expana
We have made a number of changes to the cocoa balance sheet over the past month. The CCC are reported to have put cumulative arrivals since the start of the season at 1.54 mn tonnes as of end May. This is lower than the series we have been using. Therefore, we have reduced our 2024/25 production estimate by -85,000 tonnes to 1,730,000 tonnes.
Part of this reduction is due to increased smuggling into neighbouring countries. Bean imports into consuming countries from Guinea, Liberia, Sierra Leone and Togo are all at record levels, so we believe smuggling has increased this season by at least an additional 35,000 tonnes. It is also likely that we have under-estimated the downtrend in production in Ivory Coast caused by an aging tree stock and the impact of CSSV, so we have reduced our estimate for trend production in 2025/26 by -50,000 tonnes to 1,750,000 tonnes.
2025/26 trend production estimate
tonnes
Ivory Coast
Grind Estimate
tonnes
The smaller commercialised crop in 2024/25 also has implications for our estimate of Ivory Coast grind. Over 1 mn tonnes have already been exported this season as beans, so there will be insufficient beans available to maintain grindings at the pace seen in the first half of the crop year. Therefore, we have reduced our grind estimate by -80,000 tonnes to 660,000 tonnes.
In addition to the changes in Ivory Coast and Other Africa, we have also increased our 2024/25 production estimate for Ecuador by +10,000 tonnes to reflect record exports in April (the 5th consecutive month of record exports) and reduced our production estimates for Nigeria and Indonesia by -10,000 tonnes each to reflect the latest commercial data.
The net effect of these changes is to increase our 2024/25 production surplus by +20,000 tonnes to +35,000 tonnes. There remains considerable uncertainty regarding consumption. Our latest estimate increases the decline in grindings in 2024/25 to -3.3%. Q2 grind data for Europe, Asia and North America to be released later this month will be crucial in determining whether this grind estimate reflects reality.
The fact that cocoa butter ratios have fallen to their lowest level for 22 months, suggests to us that demand has continued to weaken at an unprecedented rate in response to unprecedented prices and we expect this to be confirmed by the Q2 grind data when released.
Forecast commentary
by Steve Wateridge, Vice President, Analysis, Soft Commodities, Expana
and Jamie Pakenham-Walsh, Forecast Analyst, Expana
For 2025/26, we have reduced our production estimate for Ivory Coast despite an improvement in new crop prospects as we have had to re-assess the scale in the downtrend in Ivory Coast caused primarily by the spread of CSSV.
Lower grindings for 2024/25 also lower the starting point for our grind estimate for 2025/26. The net impact of changes made last month is to increase our 2025/26 production surplus estimate to +172,000 tonnes. However, this is also crucially dependent on Q2 grind data for confirmation.
2025/26 production surplus estimate
tonnes
Overall, we remain of the view that the cocoa market has done enough, pricewise, to eliminate the structural deficit in 2024/25 and generate a large production surplus in 2025/26 driven by weak demand, but we need to see Q2 grind data to confirm this analysis.
The Expana analysis points to the potential for lower prices if production surpluses in 2024/25 and 2025/26 are confirmed. This is supported by the technical analysis, which shows that prices have moved into a long-term downtrend.
That said, technical analysis points to prices being oversold and therefore they may well rally in the not-too-distant future. Any rally, though, is expected to only be of a temporary duration.
Reminder: The data, content or information provided herein shall (i) not constitute an inducement or encouragement to invest in any commodity, product, financial product, security, derivative, hedging product or otherwise and (ii) not constitute advice in any form whatsoever (including but not limited to hedging, market movements or otherwise). All data, content and information herein provided is provided on an "as-is" basis, and you are responsible for the conclusions drawn or the decisions made in respect of the same. This data is the copyright of Expana, its affiliates and their respective licensors.