Cocoa Prices Continue to Rise Amid Lower Surplus Projections and Indicator Demand

Agricultural Commodities – Cocoa

Cocoa prices have continued to rise for the second consecutive session on the New York exchange, bolstered by improved market sentiment following a reduction in expectations for global surplus this season, along with anticipation of commodity index-related purchases that may provide additional support to prices early next year.

Cocoa futures rose by as much as 1.5% during trading, continuing their recovery after a sharp decline earlier in the week. This performance comes as Citigroup cut its global surplus estimates by 41% to around 79,000 tons, compared to previous forecasts that indicated a larger glut in the market.

Low Stocks Despite Strong Exports

Despite the continued strength of cocoa bean shipments from Côte d'Ivoire, the world's largest producer, stocks in warehouses monitored by U.S. exchanges continue to decline, reaching their lowest levels since March, indicating a real shortage in available supplies for delivery.

Traders believe that this inventory decline reflects a gap between actual production and global demand, which reduces the safety margin in the market and provides a stronger support base for prices.

New Support Factor: Commodity Indices

In addition to fundamental factors, cocoa may receive an additional boost from its inclusion in the Bloomberg Commodity Index, as Citigroup expects this to lead to investment flows of up to $2 billion during the early days of January due to portfolio rebalancing related to the index.

Closing Prices

• Cocoa (New York): Increased by 1.1% to $6,066 per ton

• Cocoa (London): Rose by approximately 0.8%

In contrast, some other agricultural commodities performed weaker, with Robusta coffee falling by 1.5%, while raw sugar prices declined slightly.

Market Outlook

The current performance of cocoa reflects a return to market balance following recent volatility, with a shift in focus from production abundance to actual stock levels and institutional investment flows, factors that may keep prices supported in the near term.