Cocoa prices fall on demand data wait

Cocoa futures fell as traders await data that will gauge demand for cocoa products. The market is keen to understand how trends will develop amid record-high prices for the product, with the fourth-quarter 2024 cocoa grinding rate being a key focus.

The most active cocoa contract on the New York Stock Exchange fell 1.8%. Traders are now focused on data on so-called “cocoa grinding” — the process by which cocoa beans are converted into cocoa butter and cocoa powder, which are used to make chocolate bars, ice cream and other products. Awaiting data from major consumer markets in Europe, Asia and North America have been the main reason for the decline in prices. The data will be released this Thursday.

Analysts at StoneX Group Inc., Rafael Borges and Lucca Besson, note that the expected data may be ambiguous. If grinding volumes turn out to be reduced more sharply than expected, the market may perceive this as a signal of a decrease in cocoa consumption in major markets. This is especially true for demand for cocoa butter, a key component of many sweet products.

Earlier this week, data from Brazil was published, which showed a decrease in cocoa processing volumes by 5.5% in the fourth quarter of 2024. This confirms a possible trend towards a decrease in cocoa demand in some regions, which could lead to a decrease in prices.

In general, the decline in cocoa futures prices reflects uncertainty in the market. In conditions of high prices, traders are waiting for more precise data that will help understand the further dynamics of demand and production of this important product.

High cocoa prices in recent years have been the result of a number of factors, including global supply constraints and strong demand for cocoa products. However, with the slowdown in processing in some countries, the market has become more cautious about price growth prospects, making future cocoa demand data even more important.