The global cocoa market is in a state of flux: supply is slowing down and demand is weak. How will the price trend be?

Recently, chocolate manufacturing giant Barry Callebar AG has once again lowered its sales guidance. This adjustment came just three months after the last one, citing the persistently high price of cocoa as the reason. The company expects its full-year sales to decline and has reported a significant drop in sales from September last year to May this year, marking the largest quarterly decline in the past decade. This series of developments not only drew market attention to the future trend of cocoa prices, but also exposed the deep-seated problems in the global cocoa supply and demand pattern.

From the supply side, as a major global cocoa producer, the slowdown in Cote d 'Ivoire's export rate has directly affected the global cocoa supply. Although the latest government data shows that the amount of cocoa transported by Ivorian farmers to ports has increased recently compared with the same period last year, this growth rate is clearly slower than the previous significant increase. More importantly, the market is concerned about whether this slowdown trend will continue and further intensify the tightness of global cocoa supply.

In the futures market, the large short positions of commodity funds in London cocoa futures have become the focus of market attention. The increase in such short positions has raised the possibility of short covering and also laid the groundwork for future fluctuations in cocoa prices. In fact, cocoa prices have been severely hit recently. The futures prices of cocoa in New York and London have both dropped to their recent lows, reflecting the weak global demand for cocoa.

The data on cocoa grinding volume in major consumption regions such as Europe, Asia and North America are also not optimistic. According to reports from the European and Asian cocoa associations, the cocoa grinding volume in both regions decreased significantly year-on-year in the second quarter. Although the decline in North America was relatively small, it still failed to reverse the overall trend of global cocoa demand decline. These data undoubtedly further confirm the sluggish trend of the global cocoa market.

In terms of inventory, the rise of cocoa inventories at US ports to a 10.5-month high is undoubtedly a worrying signal. This not only indicates the current situation of oversupply, but may also indicate that cocoa prices will face downward pressure in the coming period.

Meanwhile, as the world's second-largest cocoa producer, the increase in Ghana's output has had a negative impact on cocoa prices. The optimistic forecast of this year's production by the Ghana Cocoa Council has further intensified market concerns over a decline in cocoa prices.

However, the quality issues of cocoa from Cote d 'Ivoire have provided some support for the price of cocoa. Due to factors such as late rainfall, the quality of crops has declined, leading some cocoa processors to be cautious about cocoa beans from Cote d 'Ivoire, with some even refusing to accept them. Although this issue has had a negative impact on Cote d 'Ivoire's cocoa exports, from another perspective, it has to some extent alleviated the pressure of global cocoa oversupply.

The latest report from the International Cocoa Organization (ICCO) is also worth paying attention to. The organization's revision of the global cocoa deficit and its forecast of a global cocoa surplus in the coming year undoubtedly provide more reference information for the market. However, behind these data lies the complexity and uncertainty of the global cocoa supply and demand relationship.

To sum up, the current global cocoa market is facing multiple challenges. From the slowdown in exports and quality issues on the supply side, to the weak situation on the demand side, and then to the increase in short positions and the rise in inventories in the futures market, these factors together form a complex picture of the future trend of cocoa prices. Against this backdrop, market participants need to remain highly vigilant and closely monitor market dynamics in order to make wiser decisions.