Cocoa prices are at risk as dock workers continue their two-week-long strike, which blocked the cocoa supply.
Although London cocoa reached a 2-year high, with New York cocoa posting a 5-month-nearest-futures high, the risk in its supply due to the ongoing strike may yet impact its price.
According to a report from the International Cocoa Organization (ICCO), the prices of chocolates in the European Union had increased quickly during the past year, recording a rise of roughly 6% from August 2021 to August 2022.
Cocoa prices should have surged along with chocolate prices as it directly affects the production in the chocolate industry. However, cocoa prices in New York and London markets fell by 13% and 9% in that same period.
According to ICCO, “Clearly, the rising cost of production factors having a higher impact on the cocoa processing and chocolate manufacturing process have by far outweighed the reduction in cocoa prices.”
“Moreover, as a result of this inflationary pressure, the weights of energy, capital, sugar and butter milk prices on production costs have become even bigger than those estimated in 2018,” ICCO added.
Ivory Coast Strike Risks Cocoa Supplies
The two-week-long strike in San Pedro Ivory Coast port on the southern coast of West Africa threatened the global supply of cocoa as the dock workers refused to unload trucks.
The dock workers on strike are demanding an increase to their pay of 30 CFA francs per bag to 105 CFA francs, or $0.1598.
One of the movement leaders, Amidou Sylla, noted, “Only smaller exporters offered this increase whereas bigger companies that have large volume have not made any offers, so we will not return to work.”
The strike happened during the supposed “peak season” for the exporters, which made them worried about the quality of the cocoa beans as the products had been stuck on the trucks without protection from heat and rain.
“The timing is not ideal. November and December are the peak of activity for us,” one of the exporters from San Pedro stated.
The Ivory Coast Strike began on October 24 and was suspended for three days but ultimately resumed on October 31. Because of this, no cocoa was delivered from October 31 to November 6.
