On Friday, cocoa prices soared after Ghana announced it requested traders to suspend their purchases beyond September amid tightening supply.
US cocoa July futures advanced 1.34% to $9,997.00 per metric ton (MT) on June 07 to establish a five-day rally. Moreover, market analysts expect a 1.01% increase to $10,098.00 per MT in the coming trading session.
Year-to-date, the chocolate ingredient added 143.24%, hitting an all-time high of $12,261.00 in April, prompting confectionary companies to suspend operations. Industry watchers cautioned that prices will likely remain elevated throughout the year, predicting a year-end close of $11,159.00.
Top producer Ivory Coast revealed shipments of 1.50 MMT for October 01 to June 02, marking a 30.00% year-over-year (YoY) decline. Commodity specialists predict the country’s total 2023/24 production will plunge by 21.50% YoY to an 8-year low of 1.75 MMT.
As a result, cocoa regulator Le Conseil du Cafe-Cacao imposed new restrictions to prevent a domestic supply shortage. Bean sales will be limited to exporters and companies that own processing plants in the Ivory Coast until at least the end of June.
In addition, the ICCO revised its 2023/24 global deficit forecast upward by 17.00% to 439,000.00 MT from the February estimate of 374,000.00 MT. Lastly, ICE-monitored cocoa inventories stored in US ports shrank to a 3-1/4 year low of 3,510,525 bags.
Ghana Rolls Over Cocoa Deliveries as Output Falls
Accra initiated talks with buyers to postpone September shipments to the fourth quarter as Ghana farms faced dwindling cocoa production. The world’s second-largest producer struggled to fulfill its contracts in the past few seasons as persistent El Niño battered West Africa’s agricultural regions.
Throughout the region, arid weather slowed the maturation of cacao plants, while declining precipitation threatened the survival of sprouts. Furthermore, the black pod disease and the swollen shoot virus continued propagating, causing mature cacao trees to rot.
Similarly, Ivory Coast asked traders to wait for the April-September mid-crop harvests before demanding order fulfillment. Thus, numerous chocolate companies intensified their exploration of alternative ingredients, which may soften cocoa demand in the long term.
