TMN - Cocoa

Cocoa Prices Rose due to a Drop in Production

On Tuesday, cocoa prices increased moderately due to tighter inventories, a slowdown in production, and global demand growth.

Cocoa futures for March delivery increased by 2.19% to $2,663.00 per metric ton on February 13’s Asian afternoon session.

Analysts said that tighter inventories can contribute to high prices. For instance, ICE-monitored NY storages held in US ports are slightly above the 9-1/2 month low from January. Also, the similarly-observed stockpiles in the EU fell to a 10-month low of 112,820 metric tons on Monday.

On a positive note, there had been small exports from Nigeria. Its Cocoa Association reported a -0.7% m/m and -73% y/y to 36,571 metric ton drop in December. Besides, the country is considered to be the fifth-largest bean producer.

According to the International Cocoa Organization (ICCO), the quarterly report from December 01 was bullish. It came after the global 2021 to 2022 production dropped to -8.00% year-on-year to 4.823 million metric tons.

Also, rough weather and diseases that hampered the yields helped with the prices. As a result, the organization revised its 2021 to 2022 figures lowered by 419,000 metric tons from the September data.

From 2020 to 2021, global manufacturing rose to a record of 5.24 million metric tons. As a result, the cocoa market faces a 209,000.00 metric tons surplus.

Ivory Coast Cocoa Exports on the Verge of Default

On Friday, cocoa exporters from Ivory Coast would inevitably backtrack from their contracts due to a lack of beans. They are urgently in need of 150,000.00 tons to fulfill their commitments.

According to a trader, they struggle to buy the commodity to honor their export contracts. Other analysts said that the amount of cocoa sold exclusively had cut the available volumes to domestic exporters.

At its crisis meeting, the watchdog proposed that they should push back the loading periods of struggling farmers. The proposal was intended to give allowance in buying cocoa beans between April and June in the mid-crop harvest.

However, an expert said it would not solve anything since customers prefer harvests from main crops, which are better than the mid-crop.

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