Cocoa prices have recorded a decline of 9.5 percent in the last week compared to the end of August, now standing at a one-year low of seven thousand dollars per ton. The significant drop in cocoa prices is attributed to market expectations of a global surplus combined with anticipated weaker demand and favorable weather conditions in the world’s largest producer (Ivory Coast), according to HUP analyses.
Ecuador (the fourth largest producer) is expected to produce over 650 thousand tons, potentially surpassing Ghana (600 thousand tons) as the second largest producer in the world. Mondelez has simultaneously stated that cocoa yields in West Africa are even seven percent above the five-year average. Therefore, we expect prices to range between six and seven thousand dollars per ton by the end of the year.
Cotton prices remained stable during September compared to August, hovering around 66.6 cents per pound. The stability in price reflects expectations of market equilibrium, which is confirmed for this year by the U.S. Department of Agriculture. However, a decline in cotton yields of eight percent is expected in the U.S. due to significantly reduced acreage and lower yields. Due to a smaller harvest and slightly higher exports, cotton stocks in the U.S. are expected to be somewhat lower at the end of the year than at the beginning.
At the same time, tariffs should not significantly impact cotton prices, as China, the largest consumer, could technically meet its import needs solely from Brazil, which surpassed the U.S. as the largest exporter two years ago. The market is experiencing relative balance, so we expect stable prices around 65 cents per pound.
