Global cocoa markets continue to face pressure, according to ICCO figures
Ghana's cocoa sector has remained under pressure, though weather for 2025 may improve crop yields. Pic: Tony's Chocolonely
Latest global cocoa production figures from the International Cocoa Organisation (ICCO) have revealed that international markets face continued challenges, with prices falling 9% in London and 6% on the New York exchange during October, with a problem of oversupply proving a key factor, reports Neill Barston.
As previously reported by Confectionery Production, the sector has been impacted notably amid the coronavirus pandemic, with prices coming under pressure amid fluctuation in demand around the world.
According to the ICCO, the market was bearish in the first month of the 2021/22 cocoa year. It noted that with both the London and New York markets, prices of the front-month cocoa futures contract witnessed pronounced drops.
Compared to the settlement values recorded at the beginning of October 2021, prices of the DEC-21 contract declined by 9% from US$2,555 to US$2,318 per tonne in London, while in New York, they plunged by 6% from $2,713 to US$2,552 per tonne. Prices declined as a result of excess supply despite the year-on-year increase in grindings for the third quarter of 2021 reported by the main regional cocoa associations.
Significantly, compared to their levels recorded in October 2020, origin differentials paid over prices of the six-month forward cocoa contract in Europe and the United States for Ghana, Ivory Coast, Ecuador and Nigeria followed a downwards trend in October 2021.
In Europe, the differential for Ghanaian cocoa averaged $333 per tonne in October 2021, down by 50% compared to US$672 per tonne recorded in October 2020. Similarly, the origin differential decreased by 59% from $527 to US$215 per tonne for Ivorian cocoa beans. While a 72% drop from $390 to $109 per tonne was recorded for the Nigerian country differential of cocoa, the country differential of Ecuador declined by 19% from $472 to US$384
per tonne.
On the U.S. market, cocoa beans from Ghana recorded a differential of US$420 per tonne in October 2021 against US$614 per tonne during October 2020. Over the same period, the premium applied to Ivorian cocoa beans fell by 33% from US$481 to US$320 per tonne. Premiums received for Ecuadorian beans in the U.S. dropped by 39% from US$231 to US$142 per tonne. In the same vein, a 40% reduction from US$407 to US$244 per tonne was recorded in the origin differential for Nigeria.
While prices declined on the ICE Futures stock markets for the period, cocoa grindings actually increased substantially in Europe, South-East Asia and North America, as represented by the European Cocoa Association (ECA) finding a year-on-year expansion of 8.7% from 345,730 tonnes to 375,811 tonnes.
Furthermore, the Cocoa Association of Asia (CAA) posted a year-on-year increase of 4.1% from 202,665 tonnes to 210,970 tonnes. In addition, processing activities improved in North America during the third quarter of 2021 with the National Confectioners’ Association (NCA) reporting a 4.3% increase from 118,264 tonnes to 123,399 tonnes of cocoa beans being ground.
At the end of the 2020/21 cocoa season, the cumulative grindings of ECA members totalled 1,434,631 tonnes, up by 50,658 tonnes from the level reached at the end of the previous season. In South-East Asia, cumulative grindings soared by 3% year-on-year to 863,239 tonnes in 2020/21. Over the same period, grindings in North America rose by 6% from 455,002 tonnes to 483,117 tonnes.
Cocoa powder increases
While cocoa bean prices destined for the chocolate market were under pressure, there was more encouraging news for cocoa powder and butter, with both segments going up in October 2021.
The ICCO noted prices of cocoa butter remained virtually flat atUS$5,363 per tonne in Europe, yet were strengthened in the United States by 7% moving from US$5,374 to US$5,729.
In a similar vein, prices of cocoa powder increased in October 2021 compared to their values recorded one year earlier. They rallied on both markets, up by 58% from US$3,058 to US$4,837 per tonne in the United States in October 2021. Over the same period in Europe, powder prices increased by 27% from US$2,825 to US$3,584 per tonne.
