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Cocoa prices just tanked for the 3rd straight day, down 2.80% on ICE NY. What's the drama? West African farmers are suddenly feeling optimistic—Ivory Coast trees are thriving, Ghana's got perfect weather, and pod counts are 7% above the 5-year average. Meanwhile, Mondelez confirms the crop is "materially higher" than last year.
But here's the plot twist: cocoa had a wild rally on Tuesday after Bloomberg announced cocoa's getting added to the BCOM index for the first time in 20 years (starting January). That $109 billion index with cocoa's 1.7% weighting could dump $1.9 billion into cocoa futures over 80 days. Sounds bullish, right?
Not so fast. Chocolate demand is cratering—North American chocolate sales dropped 21% YoY. Asia cocoa grindings hit a 9-year Q3 low, Europe's at a 10-year low. Even Hershey's Halloween sales were "disappointing." ICCO projects a 142,000 MT surplus for 2024/25 (first in 4 years), so supply's about to flood the market.
TL;DR: Bumper crop + weak demand = prices keep sliding despite the BCOM tailwind.