Cocoa Prices to Stay High Despite Projected Surplus in New Season

Although cocoa futures have dropped roughly 30% from their April highs, the market remains tight. Stockpiles are at their lowest levels in decades, and a small surplus is unlikely to restore inventories to more comfortable levels. Analysts suggest that prices will remain historically high for some time. While favorable weather has improved conditions in Africa, the cocoa market is still under pressure due to lingering issues such as crop diseases, low investment in plantations, and the sale of farmland for illegal mining. Both Ghana and Ivory Coast are raising farmer pay for the new season, with Ghana increasing payments by 45% and Ivory Coast considering at least a 23% hike. These price hikes, while beneficial to farmers, fall short of global market prices and could further limit a production rebound.