On Monday, cocoa prices increased amid low production output in West Africa as analysts forecast yields to continue their downtrend.
In the Asian afternoon session, US cocoa futures for September delivery climbed 0.54% to $7,892.00 per metric ton.
Meanwhile, the world’s top cocoa producer, Ivory Coast, has low production, which has fueled a bullish price factor for the commodity.
West Africa’s government revealed that its farmers shipped 1.61 million metric tons (MMT) of cocoa to ports from October 1 to July 7, a decrease of -29.00% from the previous year.
Analysts are sounding the alarm, forecasting that Ivory Coast’s 2023 to 2024 crop output ending in September will plummet by -21.50 % annually to an eight-consecutive year low of 1.75 MMT.
Furthermore, the crop price in London has been significantly affected after the British pound surged to a three-and-a-half-week high.
Increased margins on cocoa futures have compelled traders to cut their positions, resulting in thin trading and high volatility. The commodity futures’ aggregate open interest is now near its lowest level since 2010.
Meanwhile, Ivory Coast farmers revealed they recovered to their fields after heavy rains eased. Moreover, Ghana growers disclosed that recent rainfall has improved soil moisture and boosted cocoa pod output.
West Africa’s Soil Moisture Aids Cocoa Grow
According to reports, last week’s rains were below average in West Africa, which provided enough soil moisture to help crops grow from October to March.
The world’s biggest cocoa producer is in its rainy weather, and it is set to run from April to mid-November officially. Rain is abundant during this time but has been lacking during the past weeks.
Farmers disclosed that they were favored in the weather as many flowers and small pods were multiplying on plantation trees. Moreover, good soil moisture, morning dews, and humid air supported the crop’s development.
Cocoa growers also said they don’t require abundant rainfall at this time of year. Excessive moisture can trigger diseases and cause flowers and young fruits to fall from trees.
