Grindings
Slight climb in cocoa prices as chocolate production slows
The week ended with NY cocoa falling to an 11-month low and London cocoa falling to a 1-1/2 month low, on concern that rising inflation will curb chocolate demand, barchart.com reported.
The International Cocoa Organization (ICCO) also released a report warning that "rising inflation could restrain the consumption of non-essentials and luxury goods including cocoa products should the situation persist."
Production is projected to decline by 6% to 4.923 million tonnes. Grindings on the other hand are expected to increase by almost 2% to 5.048 million tonnes. The gap will be covered by a reduction in stocks of 9%, the ICCO said in its latest monthly report.
Several factors including adverse weather conditions and diseases are negatively affecting production for the ongoing season, with concerns for the size and quality of the ongoing mid-crop in West Africa.
Russia-Ukraine conflict
Following the Russia-Ukraine conflict, trade disruptions, sanctions and high freight rates are affecting cocoa and fertilizer trade. The shortage of fertilizers on cocoa farms will very likely affect the quantity, quality and size of cocoa beans next year.
On a more positive note, the ICCO said that despite the geopolitical and economic challenges that the world is currently facing, cocoa demand for the first half of the 2021-22 season has so far sustained a positive stance.
“Factors which contributed to the increase in cocoa demand include the resumption of activities in the air travel sector, which is a major gateway for chocolate sales as well as the recommencement of seasonal festivities.
“Positive quarterly earnings reports from major confectionery manufacturers for the period January – March 2022 also reveal that confectionery sales, which include chocolate, have picked up and are heading or at par with pre-COVID-19 era trends,” the ICCO said.