Morgan Stanley Cocoa September Edition: Relief, Not Resolution
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Cocoa prices fell in September for the first time in seven months, with London and US spot prices down 16% and 19% respectively, as industry inventories kept improving and demand came under pressure from weak European and US retail data and a Lindt profit warning. ICE futures warehouse stocks rose for a ninth consecutive month, up 2% month-over-month in September to the 45th percentile of their 24-year range. Côte d'Ivoire's cumulative 2026/27 port arrivals are up 92% year-over-year, though the data mainly reflect the tail of the 2025/26 season, and difficulties implementing the country's traceability system could weigh on early new-season supply. In Ghana, September temperatures sat at five-year highs, rainfall ran roughly 20mm below 2025 levels and about 40mm below the five-year average, and the cocoa producer price was raised 2.4% from GH¢41,392 to GH¢42,400 per tonne. Morgan Stanley's pipeline cost tracker points to deflation in H1 2027, with European and US chocolate-maker pipeline costs down 51% and 47% year-over-year in Q4 2026, before rising 17% and 13% respectively in Q4 2027, while European retail chocolate prices are flat year-over-year. Direction now hinges on 2026/27 harvest progress details due between late October and early November, with El Niño remaining a key variable. Ratings: Barry Callebaut, Fuji Oil, Meiji Holdings and Orion Corp Overweight; Lindt & Spruengli Equal-weight.
Key exhibits
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