Ghana has indicated it is preparing for its biggest harvest in at least a decade after good weather and government interventions - including improved farmer prices and better farming practices such as hand pollination and pruning - raised production to 965,493 tonnes by June 3, when the main-crop harvest ended, Bloomberg reported.
The higher-than-expected output in both Ghana and Cote d’Ivoire is contributing to a global surplus, with cocoa supply set to exceed demand by 165,000 tons in the 2020-2021 season, the International Cocoa Organization (ICCO) said in May. The ICCO had estimated that Ghana would produce 950,000 tonnes this year.
In its latest Monthly Cocoa Market Report for July 2021, the ICCO said the renewal of lockdowns in Asia and some European countries to tackle the rapidly spreading delta variant of the COVID-19, which could be detrimental to the global economy and thereby the cocoa industry, took a toll on cocoa prices.
Between 21-30 July, prices halted from their descent and strengthened on both markets in reaction to the robust increases recorded in grindings in main cocoa consuming regions namely Europe, Asia and North America.
In London, prices of the SEP-21 contract were reinvigorated by 5% from US$2,150 to US$2,250 per tonne, while in New York, prices of the nearby cocoa contract went up by 4% from US$2,265 to US$2,365 per tonne.
Outlook
In Europe, 7,960 tonnes of cocoa beans were exchanged in July, down from the 9,280 tonnes tendered in the same period in 2020. The differential for Ghanaian cocoa averaged US$301 per tonne in July 2021, 55% lower to the US$672 per tonne recorded in October 2020. Similarly, the origin differential dropped by 67% from US$527 to US$171 per tonne for Ivorian cocoa beans.
Cocoa graded on the exchange increased year-on-year by 17,100 tonnes to 136,800 tonnes in Europe and by 79,133 tonnes to 95,487 tonnes in the United States, the ICCO reported.
It also cautioned that origin differentials continued to weaken year-over-year in July in both Europe and the United States. Declining cocoa beans prices on futures markets upheld the bolstering effect on cocoa powder prices and exerted downward pressure on prices of cocoa butter.
The outlook on grindings data posted by main regional cocoa associations for the second quarter of 2021 indicated resumption in cocoa processing activities in Europe, Asia, and North America.
"There is no shortage of cocoa at the moment ... however, there are concerns that the upcoming main crop that begins in both countries in October may not reach the high level achieved last year," a market analyst from Commerzbank told Reuters..
- Read the ICCO’s report in full: https://www.icco.org/statistics/#review