Coming after the announcement that Cote d’Ivoire’s cocoa exporters are experiencing difficulties in fulfilling contracts - although the Conseil du Café-Cacao (CCC), Cote d’Ivoire’s cocoa regulator, issued a statement this week that it expects the country’s cocoa exporters to fulfil their contracts - the news will nevertheless place further pressure on the global supply of beans.
Bloomberg has reported that Nigeria's central bank in October announced it would redesign 200-, 500- and 1,000-naira notes in a bid to mop up excess cash and rein in inflation. As much as 2.1 trillion naira ($4.6 billion) has been returned to banks, and the policy has led to a severe shortage of bills as people have been unable to get new notes after depositing their old denominations.
Mufutau Abolarinwa, president of the Cocoa Association of Nigeria, said the crunch has left farmers unable to hire workers and exporters without money to get the crop to ships.
Nigeria is the world’s fifth-largest producer of cocoa beans and risks not being able to ship as much as 30,000 tons by the end of this month, according to local reports.
“We don’t have a quantum of the new notes now to pay for all the services like grading fees, handling charges, freight and some other sundry charges — all of which we usually pay in cash,” Abolarinwa said.
According to Bloomberg, Nigeria’s cocoa exports have already slumped as poor weather and fungal issues hampered the main-crop harvest. The country shipped 36,571 tons in December, while January export figures have not been released.
Cocoa prices have soared, up more than 6% this week in London, on reports that some Cote d’Ivoire cocoa exporters are close to defaulting on their contracts due to a lack of cocoa beans, with some shortage estimates as high as 150,000 tons.
Cocoa prices have seen support from 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.