On Thursday, cocoa prices slid after forecasts of the bean’s production in the Ivory Coast were revised upward.
Cocoa futures for December delivery closed the October 05 session at $3,391.00 per metric ton (MT) after a 1.17% decline. Prices for the soft commodity have been rising and falling alternatingly for nine straight days to a 3.00% net decrease.
New York Mercantile Exchange (NYMEX) cocoa futures shed 0.90% to a 6-week low of $3,400.00 per MT at yesterday’s close. At the same time, London futures for the sweetener settled 0.78% lower at a 1-month low of 2,920.00 per MT.
ICE-monitored sweet bean inventories held in US ports have dropped steadily over the past four months, supporting the commodity’s price. Similarly, the spread of the black pod disease, a common fungus infection during rainy weather, has devastated West Africa’s stocks.
Additionally, the Tropical Research Services (TRS) has revealed a swollen shoot virus outbreak in the Ivory Coast. TRS estimates that the virus will render 20.00% of the chocolate crops in the country unusable.
Exports from the Republic of Côte d’Ivoire have already been reduced by 4.10% year-over-year in the 2022-2023 market season. Likewise, Ghana reduced its cocoa shipments by 24.00% to a 13-year low of 650,000 MT due to local shortages.
In contrast, farmer reports of unexpectedly ideal rainfall have led analysts to revise their projections for the 2023-2024 season upwardly. The alteration erased Wednesday’s gain and disrupted negotiations with West African cocoa producers.
Ivory Coast May Stall Talks with Cocoa Farmers
Discussions of better deals for cocoa producers in the Ivory Coast intensified after the commodity’s price hit a record high. Following five consecutive sessions of gains, the chocolate bean hit a 44-year price peak of $3,853.00 on September 14.
Côte d’Ivoire is the world’s largest producer and exporter of cocoa beans, responsible for 33.00% of the global supply. Ghana, also located in West Africa’s cocoa-producing belt, contributes 27.00% while the remaining countries in the belt provide 20.00%.
Representing 80.00% of the global output, West African governments have implemented guaranteed producer prices for their farmers. Ghana last month announced a 63.62% increase in state-secured compensations, while Cameroon pledged a 25.00% payment hike.
When the bean’s price suddenly fell, the Ivory Coast Government and its growers had yet to finalize a deal. If prices continue to slide in the long term, the country’s farmers may become the cocoa-generating belt’s lowest-paid.
