On Wednesday, cocoa prices spiked due to a lack of liquidity, with open interest in its futures near their lowest in over a decade.
Cocoa futures for July delivery rose 7.12% to $7,843.00 per metric ton in Wednesday’s Asian afternoon session. This is a jump from $7,795.00 in the previous close.
The commodity gained support from the resilient global demand despite record-high prices.
According to the National Confectioners Association, North American Q1 grindings went up by 9.30% quarter-over-quarter and 3.70% year-on-year to 113,683 metric tons.
Europe reported a higher grinding figure of 4.70% QoQ despite falling by -2.20% YoY to 367,287 MT.
Moreover, weaker production in the Ivory Coast, the top producer globally, contributed to the recent prices. Government data reported that their farmers shipped 1.40 million metric tons of cocoa to ports from October 1 to May 12, a decline of 30.00% from the same period the previous year.
Also, projections of the Ivory Coast’s 2023/24 production ending in September expect a -21.50% YoY decline, hitting an eight-year low of 1.75 MMT.
Another bullish factor is that ICE-monitored cocoa storages in US ports slid to a three-year slump of 3,755,866 bags on Monday.
GAWU Alarmed About Ghana’s Cocoa Farms
The General Agricultural Workers Union (GAWU) raised concerns over Ghana’s potential loss of its title as the world’s second-largest cocoa producer. It emphasized the importance of urgent measures to safeguard farms from illegal mining activities.
Ghana Cocoa Board’s CEO revealed that the organization needed to refund $250.00 million from the African Development Bank for irrigation projects. It aimed to address the water contamination issues brought on by mining activities.
Analysts criticized the government’s apparent indifference regarding the problem, underlining the issue of illegal miners taking over cocoa farms. Moreover, illegal mining and water pollution forced farmers to sell their farms.
Also, warnings were sent out saying that Ghana risks losing its production capacity and esteemed reputation amid the ongoing problems.
