On Tuesday, cocoa prices gained support amid slumping inventories from significant producers of the crop and more robust demand.
US cocoa futures for December delivery increased by 32.36% to $9,654.00 per metric ton (MT) on September 10’s Asian afternoon session.
Weaker outputs in the Ivory Coast, the top global crop producer, supported its prices. Based on government data, farmers from the coast delivered 1.71 million metric tons (MMT) of chocolate’s primary ingredient to ports. The data was -28.00% lower than last year’s figures.
Moreover, expectations of tighter supplies from the ICE-monitored inventories have trended downward for the past 15 months. The inventory equated to a 15-year low of 2,331,003 bags.
In West Africa, cocoa spiked to a 2-1/2 month high on worries about extreme dryness, which can curb production.
Forecasters reported that the Ivory Coast and Ghana witnessed a steep decline in shower activity. As a result, the region lacked soil moisture and limited crop growth.
Additionally, Ghana cocoa output estimates were reduced to 650,000.00 MT, lower than the previous 700,000.00 MT in June. Furthermore, unfavorable weather conditions and crop disease dragged down the 2023/24 harvest to a 23-year low of 425,000.00 MT.
The National Confectioners Association noted a price increase amid North America’s bullish cocoa grindings and stronger demand.
Ghana Plans to Increase Cocoa Farmgate Price
The cocoa industry regulator in Ghana is negotiating to ramp up farmers’ pay by 65.00% for the season in a bid to limit crop smuggling.
According to experts, a factor that influences their decision is their optimism that the Ivory Coast will significantly hike its prices. Meanwhile, the cocoa producer has yet to disclose its costing strategies.
A jump in farmgate price below 65.00% may still be insufficient to discourage illegal shipments. Also, a slump in the Ghanaian cedi against the dollar may erode the value paid to farmers.
