Cocoa bean futures at the InterContinental Exchange (ICE) NY averaged USD 2,479/MT during the week ending 27th January 2021, representing a USD 17/MT (-0.7%) week-on-week decline and approximately USD 279/MT (-10%) below the same period of the previous year. Since hitting a nine-month high of USD 2,728/MT in late November 2020, the NY ICE benchmark has gradually declined, aside from a brief uptick in mid-January 2021. The current price weakness is being attributed to favourable growing conditions in Cote d’Ivoire, the world’s top producer. The combination of adequate rainfall, sunshine and mild Harmattan winds, present strong prospects for the mid-crop harvest that starts in April 2021. With the main crop harvest now nearing completion, sufficient pods remain on trees to potentiate robust supply until early-March 2021.
Mintec reported in mid-January how weak international demand forced the Ivoirian Coffee and Cocoa Council to employ emergency measures to alleviate inventory build-up. The European Cocoa Association reported a 3.1% y-o-y decline in Q4 2020 grindings, more-than doubling initial projections, while Asian Q4 2020 grindings also fell by 4.2% y-o-y. While North American Q4 2020 grindings surpassed expectations, increasing by 7% y-o-y against a projected 2.5% y-o-y shortfall, data shows that US chocolate demand remains weak with retail sales declining by 2.7% over the same period. However, firm retail sales are anticipated in the weeks preceding and immediately after St Valentine's Day on 14th February, which may support higher cocoa prices. This is caveated with the re-introduction of COVID-19 restrictions in parts of Europe and America, which may limit consumption growth, while the recent strengthening of the USD index further caps any upside potential