Cocoa leaders reduce production

(MENAFN) According to a recent report by Reuters, the world's leading cocoa producers, Cote d'Ivoire (Ivory Coast) and Ghana, have taken measures to halt or reduce processing in major cocoa plants due to the escalating costs of cocoa beans. This development has subsequently triggered a significant increase in chocolate prices worldwide, impacting consumers and stakeholders across the industry.

Cote d'Ivoire and Ghana together account for nearly 60 percent of global cocoa production.

However, both nations have been grappling with adverse weather conditions and cocoa pod diseases for several months, as highlighted in a report published by the African Export-Import Bank (Afreximbank) earlier this week. The challenges faced by these West African countries have contributed to a notable decline in cocoa supplies, exacerbating the already volatile market conditions.

Data from Afreximbank indicates a substantial decrease in cocoa exports from Cote d'Ivoire and Ghana over recent months. Between October 2023 and February 2024, cocoa supplies from Cote d'Ivoire witnessed a significant decline of approximately 39 percent compared to the previous year, amounting to 1.04 million metric tons. Similarly, Ghana's cocoa exports recorded a decline of about 35 percent to 341,000 metric tons between September 2023 and January 2024.

The impact of these production challenges is further reflected in the soaring cocoa prices observed in the market. Benchmark cocoa futures for March delivery on the Intercontinental Exchange (ICE) in New York surged above USD6,000 per metric ton last Friday, marking a new record high. Although prices have since eased slightly to around USD5,880 per ton, they remain significantly elevated, surpassing the previous record set in 1977.

Industry analysts have cautioned that the upward trend in bean prices is expected to persist, citing the looming threat to global cocoa supply posed by the weather phenomenon known as El Nino. The occurrence of droughts in West Africa during the third quarter of 2023, coupled with forecasts indicating its continuation until April, has raised concerns about further disruptions to cocoa production.

Steve Wateridge, director of Tropical Research Services, highlighted the urgent need for "massive demand destruction" to align with the supply constraints observed in the cocoa market. As stakeholders navigate the challenges posed by fluctuating cocoa prices and supply chain disruptions, attention remains focused on the broader implications for the chocolate industry and consumer markets worldwide.

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