Cocoa Prices Soar After Historic Inclusion in Bloomberg Commodity Index

Cocoa prices surged to new highs this week after the Bloomberg Commodity Index (BCOM) announced that cocoa will be reintroduced to its benchmark for the first time in two decades, starting in January 2025. This development has reignited investor interest in the commodity, sending both New York and London cocoa futures higher on Friday.

December ICE New York cocoa rose 1.54%, while London cocoa jumped 1.94%, marking one of the strongest sessions of the year. Analysts expect the inclusion to attract billions of dollars in fresh inflows from funds tracking the index. With roughly $109 billion in assets tied to the BCOM, cocoa’s new 1.7% weighting could generate close to $1.9 billion in futures demand over the next three months, according to Peak Trading Research LLC.

Tight Supply and Weak Pound Amplify Gains

Friday’s rally wasn’t fueled by investor optimism alone. The British pound’s drop to a 6.5-month low made cocoa priced in sterling more attractive to global buyers, adding extra momentum to London futures.

At the same time, ICE-monitored inventories in U.S. ports fell to their lowest level in seven months — about 1.8 million bags — a sign of tightening physical supply.

Cocoa is back in the spotlight — but what’s really driving the surge in prices?

Meanwhile, chocolate producer Mondelez International reported that cocoa pod counts across West Africa are 7% above the five-year average, signaling a healthy main crop. Farmers in the Ivory Coast, the world’s top cocoa exporter, remain optimistic about yields, but official data shows exports are down 24% year-on-year, suggesting that logistical and shipping challenges persist despite strong harvests.

Demand Concerns Cloud the Sweet Outlook

Despite the bullish setup, not all signals favor a sustained rally. Analysts have noted a dip in chocolate consumption, particularly in North America, where candy sales have fallen 21% year-on-year. Hershey’s CEO described Halloween demand as “disappointing,” an unusual sign for a season that accounts for nearly one-fifth of annual candy sales in the U.S.

In Asia, cocoa grindings dropped 17% year-on-year to a nine-year low, while European grindings slipped 4.8%, their weakest third-quarter figure in a decade. North America posted a slight increase, though experts warn that new reporting adjustments may have exaggerated the gain.

Adding complexity, Ghana’s cocoa deliveries have jumped to 50,440 metric tons, more than quadruple last year’s figure, while Nigeria — the world’s fifth-largest producer — expects an 11% decline in output next season despite higher exports.

Long-Term Outlook Remains Bullish

The International Cocoa Organization (ICCO) recently revised its 2023/24 global deficit to –494,000 metric tons, the largest shortfall in over six decades. Although the agency forecasts a 142,000 metric ton surplus for 2024/25, market watchers remain cautious, citing weather risks and shifting consumption patterns.

For now, cocoa prices appear well supported by investor inflows, falling inventories, and renewed attention from the commodities market. If these trends continue, cocoa could maintain its sweet momentum well into 2025 — marking a powerful comeback for a commodity long overlooked by global funds.

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