ICCO report reveals cocoa prices hit near seven-year high
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Cocoa commodity prices have rallied to a seven-year high to around the $3,000 in New York and £2,300 in London, amid a global production shortfall, according to latest figures from the ICCO, writes Neill Barston.
As we previously reported, supply deficits were expected to dramatically increase this year to 142,000 tonnes for the 2022/23 crop season, with highly inflated fertiliser costs, impacted by the ongoing war in Ukraine a key factor behind the shortfall.
According to the International Cocoa Organisation, other factors behind the price rise of cocoa has been positive cocoa demand, as well as adverse weather conditions placing a premium on existing quality supplies. As industry observers have noted, such crop value increases are welcome, though sustained patterns of growth would be required to enable farmers to move towards a living income – with many agriculture workers still earning below UN poverty-defined levels in Ghana and Ivory Coast.
The latest ICCO report showed that as of 4 June 2023, cumulative arrivals of cocoa beans in Ivory Coast were seen at 2.104 million tonnes, down by 4.8% (or -100,000 tonnes) compared to 2.204 million tonnes recorded during the corresponding period a year earlier.
Significantly, the ICCO noted that while supply concerns have fulled an upturn in prices, demand for beans could impact on the situation, given additional factors such as continued increases in sugar prices, and rising prices in other areas of the supply chain, which the organisation acknowledged could see the present value in cocoa prices to be reversed amid such wider uncertainties.
Notably, it stated that recent heavy downpours have been reported in major producing countries and have led to heightened fears of disease outbreaks as well as over the quality of the mid-crop cocoa beans.
Another considerable factor has been that, according to the ICCO, poor bean quality has been observed in Ivory Coast, with cocoa bean counts averaging 120 for every 100 grams. Exporters prefer counts of 80 to 100 for every 100 grams, with the best cocoa quality having the lowest bean count.
Furthermore, the growing concern over an El Niño climatic phenomenon developing later in the year has been making the headlines. In West Africa, El Niño is linked to dry weather conditions and depending on its severeness, can be detrimental to cocoa production.
Moreover, fertiliser costs continue to be impacted by the war in Ukraine, and from its latest analysis, the ICCO showed that between 2019 and 2022, prices have tripled in cost, though have begun to fall in recent months, while remaining historically high.
