WORLD- Cocoa prices closed sharply higher in the week ended June 28, after ICE-monitored cocoa inventories in the US fell to a 3-year low of 3.24 million bags.
These reports caused a ripple increase in futures. Cocoa futures increased by 5.75% (+418) in New York and 4.64% (+332) in London the reported week.
Another key bullish factor in the cocoa market was data released by the Ivorian government on June 24 that revealed Ivorian farmers shipped 1.57 million tons of cocoa to ports from October 2023 to June 2024, a 29% decline from the same period in the previous season. According to Trader Ecom Agroindustrial projects, cocoa production in Ivory Coast is projected to decline by 21.5% to an 8-year low of 1.75 tons in the 2023/2024 season.
Cocoa prices are also affected by concerns over the West African mid-crop harvest, which is projected to be lower than in previous years.
The data further reinvigorated fears in the market of a continuation of the current global cocoa shortage barely two weeks after Ghana’s COCOBOD revealed it would delay the delivery of close to 350,000 tons of cocoa beans in the 2023/2024 season due to poor harvests.
The sudden rise in cocoa prices reported comes barely a week after cocoa futures dropped slightly following a report by Forecaster Maxer technologies and other industry analysts revealed harvests in West Africa will increase due to favorable weather, reflecting the volatility currently experienced in the Cocoa market.
Ghanaian cocoa regulator that it expects harvests in the 2024/2025 season to rebound to 700,000 tons from 425,000 tons in the current season due to favorable weather.
Cocoa prices are also supported by reports that demand will remain resilient despite current supply chain and pricing challenges. The National Confectioners Association recently reported cocoa grindings increased by 9.3% in Q1 2024 and 3.7% year-on-year in the same quarter to 11.683 tons. Grindings increased by 5.1% in Asia and 4.7% in the reported quarter.
However, market analysts remain skeptical about the current state of the cocoa market. The current price volatility is expected to continue until the 2024/2025 season starts in September/October.
Liked this article? Subscribe to Food Business Africa News, our regular email newsletters with the latest news insights from Africa and the World’s food and agro industry. HERE
