On Wednesday, cocoa prices crashed as Ghana expected a 2024/25 output rebound, and the US dollar rallied after Donald Trump won a second presidential term.
US cocoa futures for December delivery plummeted by 3.79% to $6,947.00 per metric ton (MT) on November 06, establishing a two-day losing streak. Moreover, market analysts predict the slump will continue with a 1.80% drop to $6,822.00 an MT in the coming trading session.
Ghana revised its production estimate for the current crop season to 650,000.00 MT, up from an earlier forecast of 500,000.00 MT. This improved outlook is attributed to healthier pods amid favorable rainfall and sunshine and the timely use of pesticides and fertilizers.
Meanwhile, Republican Trump’s dominating victory over Democrat Kamala Harris sent the US Dollar Index skyrocketing by 1.61% to 105.09 points. The greenback’s surge to a four-month high weighed down on most commodities, including cocoa.
A stronger US dollar encourages export selling from holders of other currencies, increasing the circulating global supply. Thus, commodity specialists anticipate a surge in cacao bean shipments from Ghanan producers.
In addition, Ivory Coast regulator Le Conseil Cafe-Cacao revised its 2024/25 output forecast to a median of 2.15 MMT from a June projection of 2.00 MMT.
Ghana Faces Cocoa Challenges Other than Weather
Despite improving weather, Ghana still has several major problems it must solve to revitalize its ailing cocoa industry. Smuggling remains the biggest threat, with Cocobod reporting that Accra lost over a third of its 2023/24 output to smuggling.
The growing illegal gold mining industry also continues to threaten Ghana’s agriculture industry, leading to declining yields across the board. Unsanctioned mining has devastated the environment, disrupted ecosystems, and eroded soil quality, slowing the budding and maturation of most crops.
Lastly, environmental damage from mining-generated pollution has increased the chances of disease outbreaks in Ghana’s cocoa-producing regions. Annually, black pod disease results in an average loss of 10.00% of total output for countries in the cacao belt.
