Weak Demand Signals and Positive West African Harvest Outlook Push Cocoa Below $5,000

London | EcoPulse24

Cocoa futures prices dipped below $5,000 per ton, reaching their lowest since November 26, as weak demand signals coincided with improved supply forecasts from West Africa. The price pressure followed a decline in cocoa grinding activity in Europe, a region representing a large share of global consumption.

Fourth-quarter data showed European cocoa grindings fell by 8.3% year-on-year to 304,470 tons, marking the sixth consecutive quarterly drop and significantly exceeding market expectations of a 2.9% decrease. This divergence reinforced the view of weak end-user demand, with traders awaiting North American and Asian data to complete the picture.

On the supply side, expectations are for increased harvests in major West African producing regions, especially Côte d'Ivoire and Ghana, as favorable weather is seen supporting the upcoming harvest in February and March. Farmers reported an anticipated improvement in crop quality, with cocoa trees beginning to flower - an early sign that could boost the mid-crop season expected between April and September.

Analysis
The current decline reflects a temporary imbalance favoring supply, as improved availability precedes any clear demand recovery, particularly in Europe. Continued weakness in grinding limits the potential for prices to recover in the near term, with any turnaround likely dependent on stronger demand signals from North America and Asia or sudden weather changes during the peak harvest.