Market Briefing: Cocoa -06 June 2021

– Global cocoa supplies for 2020/21 estimated at 165,000-tonne surplus
– Global output seen at all-time peak of over 5 million tonnes
– Global grindings expected to rise by 3% y/y to 4.8 million tonnes

Production

Global cocoa supplies for 2020/21 are estimated at a 165,000-tonne surplus, owed to an expected historical production record, according to the ICCO. Its forecast for global output was raised by 181,000 tonnes, compared to its previous estimate, to an all-time peak of 5.024 million tonnes. Top producer, Ivory Coast is expected to produce 2.2 million tonnes, while volumes for third largest grower, Ecuador, are seen at a record 340,000 tonnes for the 2020/21 season. Ghana’s production is anticipated to increase by 19% y/y to 950,000 tonnes, while the ICCO expects Brazil’s to drop to 180,000 tonnes. Indonesia’s cocoa output is forecast at 200,000 tonnes for the season under review.

Demand

The ICCO also revised its global grindings forecast for the 2020/21 season, with volumes now expected to rise by 3% y/y to 4.8 million tonnes, recovering around 138,000 tonnes of the volume lost during the 2019/20 pandemic era. Increases are predicted for Asia and Oceania (up 5% to 1.1 million tonnes), the Americas (up 7% to 946,000 tonnes) and Africa (up 2% to 1.019 million tonnes). However, a decrease is expected for Europe (down almost 1% to 1.6 million tonnes). Cocoa grindings in importing countries are forecast to rise by 3% from 2.521 million tonnes in 2019/20 to 2.596 million tonnes in 2020/21. Meanwhile, origin grindings are forecast to rise by almost 3% in the current 2020/21 season, up by 63,000 tonnes to 2.2 million tonnes.

Trade

Brazilian exports of cocoa and its by-products slipped by 13% y/y in volume and 14% y/y in revenue in April, to 4,480 tonnes and USD15 million, according to Secex. This was driven by Bahian exports falling 15% y/y in volume and value, to 4,345 tonnes and USD14 million. Brazil’s chocolate exports in April stood at 2,335 tonnes and USD7 million. Looking at 2020 overall, cocoa and by-product exports totalled 63,520 tonnes and USD206 million, virtually unchanged compared to 2019. Chocolate shipments alone grew by 7% y/y for exports to 28,851 tonnes.

Price

Cocoa prices were mixed over the last seven days, as they tried to consolidate above last week’s three-week lows. New York cocoa hit a one-week high on Tuesday (June 1), closing moderately higher at USD2,431. However, gains were limited following the ICCO’s revised estimates. By Wednesday (June 2), London cocoa posted a three-week low, with the July contract settling GBP14 lower to GBP1,609.

(IHSmarkit)