CEM REPORT, AGROFOOD | Cocoa currently sells at $4,520.47 per ton in the international market after it lost $1.47 from the $4,546.69 per ton it sold Wednesday
The price of cocoa has aggregately maintained an upward trend for the past 12 months starting from mid December 2022 when the commodity recorded a low price of 2,386.92 per metric ton. Price have almost doubled hitting more than 45 years high of 4,520.47 according to today’s price at the time of this report. This is an 89.39% increase from December 2022.
Over the last 58 days, prices have moved 26.11% from 3,584.45. Rising prices is propelled by tightening supplies resulting from lower production in the two major producing countries; Ivory Coast and Ghana following a poor cocoa harvest.
Lower production of the two countries is attributed to the recent heavy rain in West Africa which has caused black pod disease to spread. Also, the spread of the swollen shoot virus in Ivory Coast is a contributing factor to the lower yield from the country. Tropical Research Services estimates that about 20% of the cocoa crop in the Ivory Coast is infected with the swollen shoot virus.
Ghana Cocoa Board (COCOBOD), the regulator of the cocoa industry in Ghana, said on August 16 that some of its cocoa farmers are unlikely to fulfill some of their cocoa contracts for a second season. The organization postponed 44,000 MT of cocoa shipments to future seasons due to a lack of supplies. Ghana’s 2022/23 cocoa crop is now expected to be around 683,000 MT, a 13-year low and 24% below initial estimates of 850,000 MT, as a lack of fertilizers and black pod disease hurt cocoa yields.
The International Cocoa Organization pointed out in their November 2023 Quarterly Bulletin of Cocoa Statistics that the 2022/23 season was mainly characterized by a decline in supply from the two main producing countries and ended with a global production deficit. As the current 2023/24 season is also expected to end with a global production deficit, market participants continue to weigh the situation of successive supply deficits.
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In reverse, on the bearish side, Nigeria’s October cocoa exports rose by 12% y/y to 17,869 MMT. This is however insignificant to make impact in the global supply as the country stands as number five in global cocoa production.
According to Nasdaq, citing Circana report, U.S. chocolate sales in the four weeks ended October 8 fell by 9.2% y/y. The National Confectioners Association reported on October 24 that Q3 North American cocoa grindings fell by 18% y/y to 97,881 MT, lower than expected decline of 12% y/y and the fewest grindings for a Q3 in 15 years.
On October 23, Cocoa Association of Asia reported a decline in Asia Q3 cocoa grindings by 8.5% y/y to 211,468 MT, while in Europe, the European Cocoa Association said in October that European Q3 cocoa processing declined by 0.9% y/y to 366,298 MT.
