Cocoa prices slip as Ghana and Côte d’Ivoire increase main crop output

In its latest Cocoa Market Report (December 2022) the International Cocoa Organization (ICCO) said halfway through the 2022-23 main crop, the output in Côte d’Ivoire and Ghana,  the two top world cocoa producers, is higher than the levels recorded during the corresponding period of the previous season.

As of 8 January 2023, arrivals of cocoa beans at Côte d’Ivoire’s ports of exports were seen at 1.346 million tonnes, up by 11.6% year-on- year. However, the country’s exports of cocoa beans during the first two months of the 2022-23 cocoa year were undercut by 47% year-over-year from 186,842 tonnes to 99,950 tonnes.

The quarterly report from ICCO was ‘bullish’ for cocoa prices after it said global 2021-22 cocoa production fell -6.8% y/y to 4.89 MMT as unfavourable weather and disease hampered cocoa yields. The ICCO revised its 2021-22 global cocoa production figure downward by -67,000 MT from the September figure.

'In December 2022, prices of the front-month cocoa futures contract averaged $2,514 per tonne and ranged between $2,392 and $2,635 per tonne in London, while in New York the first position contract traded at an average price of $2,515 per tonne and oscillated between US$2,432 and US$2,629 per tonne,' said barchart.com, in its latest market report.

According to the ICCO, back in December 2021, the prices were lower and the average price of the front-month contract settled at $2,185 per tonne and ranged between $2,004 and $2,308 per tonne in London.

Meanwhile, prices of the first position of cocoa futures in New York averaged $2,471 per tonne and oscillated between $2,314 and $2,625 per tonne over the same period.

Cocoa prices were already on the defensive from ample cocoa supplies from the top two producing countries. The ICCO report eased concerns that the Harmattan winds are damaging West African cocoa crops, but said the carriers’ strike action at the port of Pedro in Cote d’Ivoire in November 2022 contributed to the reduction in the exports of cocoa beans during that period.

Cocoa prices have seen support regarding concern about the quality of some West African cocoa crops. Cocoa farmers continue to struggle with the lack of fertilizer and pesticides as the war in Ukraine has limited Russian exports of potash and other fertilizers worldwide.

Barchart.com said an excessive long position in London cocoa futures could fuel long liquidation pressures after last week’s weekly Commitment of Traders (COT) report showed funds boosted their net-long London cocoa positions by 5,693 the week ended January 10 to 88,812, a 7-year high.

Global cocoa grindings

The National Confectioners Association (NCA) reported Thursday (19 January) that Q4 North American cocoa grindings fell -8.1% y/y to 107,130 MT. On the same day, the European Cocoa Association (ECA) reported that European Q4 cocoa grindings fell -1.7% y/y to 359,577 MT, while the Cocoa Association of Asia said Asia Q4 cocoa grindings fell -0.2% y/y to 230,806 MT.