On Monday, cocoa closed moderately lower as the reduction of crop quality issues in West Africa charged long liquidation.
Cocoa futures for May delivery went down by -2.52% to $2,859.00 per metric ton on April 03’s Asian afternoon session.
Ivory Coast and Ghana farmers announced that the harvest hit 115.00 cocoa bean counts per 100.00 grams for 2023’s mid-crop. It is above the average of 80.00 to 100.00 cocoa bean counts per 100.00 grams expected by exporters.
Moreover, the current robust inventories in the US are bearish for prices, as said by analysts. ICE-monitored storage in American port warehouses rose to a 3-1/2 month high of 5,354.59 bags.
Last Monday, the Cocoa Association of Nigeria reported that its February deliveries jumped by 15.00% year-on-year to 43,405.00 metric tons. However, the data is negative for prices, based on experts.
Another disadvantage is the increase in European supplies. For example, EU volumes on March 15 reached a 6-1/4 month high of 139,060 MT.
According to the Ivory Coasts’ cocoa regulator, it would restrict some multinational traders from additional purchases for transport. It halted Barry Callebaut and Cargill from purchasing extra beans since both companies exceeded the amounts in their contracts.
Also, global demand is falling, leading to negative factors for the commodity. As a result, the National Confectioners Association announced that fourth-quarter grindings dropped by -8.10% YoY to 107,130 MT.
Ghana Marked Safe from EU Cocoa Ban
Ghana farmers felt relieved when the European Union confirmed most of the cocoa was safe from the ban.
In December, legislation was submitted by the EU parliament to ban some commodities that are connected to deforestation. The bean’s production is the top cause of erosion for the region known for two-thirds of cocoa output.
The West African country exports more than 80.00% of its yearly volumes to the European Union. In the previous decade, its annual production reached 800,000.00 MT, most of it transported in its raw state.
According to an expert, the deforestation regulation would not heavily impact their sales and imports to Europe.
