Ivory Coast and Ghana cocoa prices remain volatile after 15% Futures market price drop
Considerable market volatility has continued to impact key cocoa markets in Ghana and Ivory Coast, in the wake of a 15% drop in New York Futures prices from over $9,000 a tonne to $7,300 at the start of this week, reports Neill Barston.
The sudden dramatic drop in values has been attributed by some financial observers to wider US stock market falls that cut across a number of sectors including agricultural commodities, adding to a further picture of uncertainty.
This follows a similarly mixed global picture for cocoa prices last month, with the ICCO reporting an observation of much higher price increases in Europe than the United States, was likely to relate to the fact that the main destination of beans from Ivory Coast and Ghana is Europe, and with the low supplies from the leading producers. It suggested that this was behind the subsequent shortfall in Europe and consequent price increases.
However, the upward momentum seen just weeks ago – which itself followed a significant spike in prices that peaked this May with Futures markets in New York posting prices of $12,000 a tonne, have now fallen away to just over $7,200. This in turn is reportedly placing pressure on the prices being paid to farmers in Ghana and Ivory Coast, where, despite the two nations accounting for two thirds of the cocoa trade, earnings have continued to lag behind a number of other smaller producing nations in Africa.
In addition, another factor reported in Ivory Coast in the past two months has been a perceived decline in the quality of beans, with traders noting at the start of last month that sales had been sluggish due to adverse weather conditions impacting crop supplies. As we have previously covered, cocoa plantations in the region have also remained notably susceptible to major issues such as swollen shoot virus, that has reportedly impacted an unquantified number of cocoa growing regions in both Ghana and Ivory Coast.
A cocoa market specialist speaking to Confectionery Production on the basis of remaining anonymous, observed that remained notable volatility in the market, noting that farmgate prices were also being impacted in West Africa.
He said: “Early last week, global US market crashed while cocoa prices shoots up, but trading sideways down later. The spike is due to New York terminal warehouse stock dropping to a four year low, while the drop is due to better supply output seen in Cameroon. Commodities are receiving mixed reactions, but the trend is deemed bullish. Origin weather has stayed unchanged, and had seen improvement for upcoming crop. However, the complexity of the European Union Deforestation Regulation (EUDR) is reducing the proportion of cocoa beans that can enter Europe. The cocoa market is experiencing low liquidity, causing significant price movements with even small pieces of news. In addition, US macro market is bad as recession fears factor in after weak US data.”
Ivory Coast farmgate concerns
As reported locally by Issiaka Fadiga, another significant development emerged in the past week for Ivory Coast specifically, as Kanga Koffi, president of the national association of cocoa and coffee producers hosted a press conference on Monday, alongside the national Agricultural union for progress in Ivory Coast (Synapci).
Among the core issues discussed core issues including prices paid directly to farmers – which were reportedly the equivalent of $2.47 a tonne for the most recent crop season, which remains less than a third of the figures of $9,000-$10,000 being fetched on futures markets earlier this summer.
Kanga Koffi said: “We have suspended our strike call during the 2023-2024 interim campaign. We are therefore waiting with great interest for the price of the new campaign. Our sources tell us that the coffee-cocoa council has already sold cocoa until 2025. In the interest of transparency, producers would like to know how much the various sales have been set at in order to better assess the price they will be paid.”
