ERA OF PRICE BOOM: WEATHER AS A ROOT ISSUE BEHIND CURRENT SUPPLY SHORTFALL
Cocoa prices continued to extend their rallies in November and by the end of the month reached US$4,522 per MT in London and US$4,458 per MT in New York. Compared to prices at the official start of the 2023/24 season in October, this reflects an increase of 23% and 27% in London and New York, respectively. The current supply shortage, which has resulted in the prevailing price rallies, has mainly been caused by unconducive weather conditions in Côte d’Ivoire and Ghana. Heavy rains have affected farming activities, the
spread of diseases and haulage operations in the two countries. As these two leading producing countries supply about two-thirds of global cocoa beans, any change in their production tends to have a significant impact on the cocoa market.
Sourcing of cocoa beans has been challenging due to the downpours. The rains are reported to have affected the cherelles (young cocoa pods) on trees and have also brought about the rampant spread of black pod disease. Fermentation and drying of beans have also been an issue due to the lack of ample sunshine. Furthermore, transportation of available beans to the ports has been hindered by the deplorable state of roads leading to the farms, worsened by the rains.
Cumulative arrivals data published by Reuters show that since the official start of the season on 01 October 2023, main crop cocoa arrivals at ports in Côte d’Ivoire reached 548,000 MT by 03 December 2023, down by 35% compared to the same period during the last season. In Ghana, graded and sealed cocoa data from the start of the season on 08 September 2023 to 23 November 2023 is estimated at 189,470 MT. This is significantly down by 51% as compared to 383,496 MT recorded for the same time frame a year ago. All these have raised concerns over the outlook for the remaining main crop.