On Tuesday, cocoa prices increased to 2-1/2-week highs due to the lower production in the Ivory Coast and US undersupplies.
In the Asian morning session, the US crop futures for December contracts closed the trading by rising 1.10% to $7,780.00 per metric ton.
Government data revealed that from October 1 to September 15, Ivory Coast farmers exported 1.72 million metric tons of cocoa to ports. This is a -28.00-decline compared to the same quarter of the previous year.
Furthermore, London crop gains were offset after the British pound soared to a one-week high, weakening cocoa costs in terms of sterling.
Tighter cocoa supplies are driving up prices, as inventories monitored by ICE at US ports have been decreasing for the past 15 months. Last Friday, these stockpiles hit a 15-year low, dropping to 2,310,688 bags.
Meanwhile, the crop prices gained support last Wednesday after reports that Ghana has raised the payment to farmers by 45.00% to $3,063.00 per ton for 2024/25. The increase was below the expected 65.00%, possibly leading farmers to hoard beans for better prices.
Moreover, cocoa prices are bolstered by Accra’s Cocoa Board (Cocobod), which cut its 2024/25 production estimate to 650,000 metric tons (MT) last month, down from 700,000 MT forecasted in June.
Due to adverse weather and crop disease, the country’s 2023/24 harvest dropped to a 23-year low of 425,000 MT. The second-top cocoa producer’s 2024/25 harvest will start in October.
Ghana Lost Over 30% of Cocoa Output Amid Smuggling
According to Cocobod, Ghana lost more than 160,000 tons or more than 30.00% of cocoa yields due to smuggling in the 2023/24 season.
The issue arises as farmers, frustrated by low domestic prices and payment delays, turn to more advanced trafficking networks to sell their crops.
Poor harvests in Ghana and the Ivory Coast, the two largest cocoa producers globally, have led to a four-year supply deficit. As a result, global cocoa and chocolate prices have risen this year.
Furthermore, by June’s end, Ghana had produced 429,323 metric tons of crop, under 55.00% of the average in past seasons. This puts the 2023/24 output on course for its steepest decline in over two decades.
