Harsh weather in Ghana and Nigeria may lead to a 462,000 tonnes of cocoa beans valued at $3.33 billion deficit this year in the global market.
According to the International Cocoa Organisation (ICCO), the daily price of cocoa as of November 11, 2024 was $7,200.04 per tonne as cocoa prices are moving higher daily, with London cocoa posting a 3-1/2 week high.
Findings revealed that cocoa prices jumped after forecaster, Maxar Technologies, said that parts of Ghana and Nigeria were experiencing dry and hot weather that could impact the cocoa midcrop, which officially starts in April.
Also, Barry Callebaut, one of the world’s largest chocolate producers, said that while cocoa crops in West Africa were showing significant improvement versus last year, the step up was still not at the levels seen in the 2022/23 season.
Shrinking global cocoa stockpiles are bullish for prices. ICEmonitored cocoa inventories held in US ports have been trending lower for the past 17 months and fell to a 19-year low last Friday of 1.71 million bags.
On the negative side is news that the pace of the Ivory Coast cocoa harvest is picking up, which is boosting supplies. Government data today showed that Ivory Coast farmers shipped 454,624 tonnes of cocoa to ports from October 1 to November 10, up +30 per cent from 348,560 tonnes shipped the same time last year.
The Ivory Coast is the world’s largest cocoa producer. Cocoa prices were undercut when the Ivory Coast regulator, Le Conseil Cafe-Cacao on October 18 raised its Ivory Coast 2024/25 cocoa production estimate to a range of between 2.1 and 2.2 million metric tonnes from a June forecast of 2.0 million metric tonnes.
Recent global cocoa demand news was mixed. The National Confectioners Association (NCA) on October 17 reported that North American Q3 cocoa grindings rose +12 per cent y/y to 109,264 tonnes.
Also, the Cocoa Association of Asia (CAA) reported that Q3 Asian cocoa grinding rose +2.6 per cent y/y to 216,998 tonnes. However, the European Cocoa Association (ECA) reported that European Q3 cocoa grindings fell -3.3 per cent y/y to 354,335 tonnes.
Cocoa found support after Ghana’s Cocoa Board (Cocobod) on August 20 cut its 2024/25 Ghana cocoa production estimate to 650,000 tonnes from a June forecast of 700,000 tonnes.
Due to bad weather and crop disease, Ghana’s 2023/24 cocoa harvest sank to a 23-year low of 425,000 tonnes. Ghana is the world’s second-biggest cocoa producer, and its 2024/25 cocoa harvest begins in October.
An increase in cocoa production by Cameroon, the world’s fifth-largest cocoa producer, is bearish for cocoa prices. On August 21, Cameroon’s National Cocoa and Coffee Board (CNCCB) reported that in 2023/24 (Aug/July), Cameroon cocoa production rose +1.2 per cent y/y to 266,725.
Also, Nigeria’s August cocoa exports rose by +6.8 per cent y/y to 14,984 tonnes. Nigeria is the world’s sixth-largest cocoa producer. In a bullish factor, ICCO on August 30 raised its 2023/24 global cocoa deficit estimate to -462,000 tonnes from May’s -439,000 tonnes, the largest deficit in over 60 years.
Also, ICCO cut its 2023/24 cocoa production estimate to 4.330 million from May’s 4.461 million metric tonnes. ICCO projected a 2023/24 global cocoa stocks/grindings ratio of a 46-year low of 27.4 per cent.
Recalled that in the first quarter of the year, importers have entertained the fear that Nigeria may lose N876 billion ($562 million)in earnings in 2023/24 export because of weather and fungi.
It was gathered that harvest in the country has been projected to fall to 210,000 tonnes ($1.13 billion) from 300,000 tonnes in 2024 due to hot weather, pest and diseases as price of the commodity hit $6,250 per tonne as at February 15 2023, leading to a loss of 30 per cent.
World Bank trade data revealed that more than 60 per cent of the country’s cocoa is being shipped to Europe and about 8 per cent to the United States and Canada.
Findings also revealed that export of graded and certified cocoa was traded at $3,889 per metric tonne in January 2024 in the Southwest, leading to 37 per cent in price increase in less than one month.
According to the Cocoa Association of Nigeria (CAN), the commodity is widely produced in Oyo, Ondo, Ekiti and Ogun states which account for 70 per cent of Nigeria’s annual production.
Meanwhile, a new research by CoBank’s Knowledge Exchange indicated cocoa prices have been rallying on expectations of lower supplies across the major cocoa producing regions in West Africa, which accounts for almost 70 per cent of the world’s cocoa beans production.
Following a recent survey of exporters, pod counters and regulatory officials, 2023-24 cocoa bean production in top producer Ivory Coast was forecast at 1.75 million tonnes, down 550,000 tonnes, or 24 per cent from 2.3 million tonnes in 2022- 23 and Nigeria 300,000 tonnes, less by 90,000 tonnes.
The International Cocoa Organisation also noted that adverse weather, the rapid spread of swollen shoot disease has had a major impact on cocoa production in the region.
Recall that the Cocoa Farmers Association of Nigeria (CFAN) had forecast that it would increase production in the country to 500,000 metric tonnes in 2024.
