ICCO figures show cocoa supply chain deficits amid high volatility in global prices
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The International Cocoa Association (ICCO), has released its latest quarterly bulletin revealing that crop deficits are ‘expected to be higher’ than previously anticipated, amid a shortage of supplies coming forward from key West African producing nations of Ghana and Ivory Coast, reports Neill Barston.
Significantly, the move comes as the global market has been impacted by renewed volatility in prices – which had rocketed to nominal value highs on the New York and London Futures specialist commodity markets, to $12,000 a tonne in April, before slumping by over 30% to just over $7000 the following month, confounding market observers.
However, as May has progressed, prices have now revived towards their previous peak, with advanced supplies now trading hands in the region of $9,300 a tonne, which is still more than three times the value of crops just 18 months ago.
As the ICCO noted, global production and grindings are projected to decline by -11.7% to 4.461 million tonnes and by -4.3% to 4.855 million tonnes, which has further complicated the picture, with consumers around the world feeling the pinch as manufacturers pass on the costs to shoppers. As previously reported by Confectionery Production, seasonal premium ranges were reported to be up in price by more than 30% last December. The same was also seen recently for Easter, as manufacturers faced higher processing costs, with both cocoa and sugar prices continuing to remain high against previous levels.
In its assessment of the situation, the ICCO said that while at the start of the season, there was uncertainty regarding cocoa demand due to increasing cocoa prices, current available data reveal that cocoa grinding activities have so far been unrelenting in importing countries despite the record cocoa price rallies. However, grinding at origin which was earlier on viewed as an impetus to prop up demand, as producing countries engaged earnestly in value addition investments, has slowed down due to the lack of beans.
Furthermore, the cocoa organisation noted that global exports of cocoa beans and semi-finished cocoa products, measured in bean equivalent, reached 2.36 million tonnes during October to December 2023, representing a decrease of almost 6% compared to 2.5 million tonnes recorded during the same period in the previous season. The decline in trade activities may be a consequence of the supply tightness from top producing countries in West Africa.
The issue of farmer pay amid skyrocketing cocoa prices formed the cornerstone of the recent World Cocoa Conference, with the event acknowledging that paying enhanced wages to key markets including Ghana and Ivory Coast to ensure a living wage was of vital importance to the future viability of the industry.