Commodities
Weather variations hit cocoa supplies, pushing up prices
According to barchart.com the news that Cote d’Ivoire farmers shipped 2.29 MMT of cocoa from 1 October to 16 July (down -2.6% y/y) saw the outlook for tighter future cocoa supplies and a ‘bullish’ market for prices after news that 2023-24 Cote d’Ivoire’s forward cocoa sales during Oct 1-July 7 fell -1.3 MMT (-13.3%) y/y.
Cote d’Ivoire is the world's largest cocoa producer and Reuters reported at the beginning of the week it had stopped selling contracts for cocoa exports for the 2023-2024 season after heavy rains battered and flooded farms in recent weeks,
With cocoa prices currently at record levels due to concerns over supplies, the suspension of sales will come as a blow to the country which the United Nations says is reliant on cocoa for 40% of its export earnings.
Yves Brahima Kone, director general of the Coffee and Cocoa Council (CCC) said sales before the suspension had exceeded one million tonnes. The total output projected for the current season was 2.2 million tonnes.
The main cocoa harvest is set to start flowing into ports for export from October, said Brahima Kone, telling Reuters that output is expected to decline significantly.
"We expect much less cocoa in the first part of the main harvest compared to this season. We hope that the production from January to March will help balance our volumes, otherwise, it will be a problem," he said.
On the markets, Cocoa prices have support from concern that an El Nino weather event could undercut global cocoa production. On 8 June the US Climate Prediction Center said that sea surface temperatures across the equatorial Pacific Ocean had risen 0.5 degrees Celsius above normal, and wind patterns have changed to the point where El Nino criteria have been met.
Cocoa prices rallied to 12-year highs in 2016 after an El Nino weather event caused a drought that hampered global cocoa production.
The International Cocoa Organization (ICCO) forecasts a global cocoa deficit for 2022/23 of -146,000 tons. ICCO said, "The expectation of a supply deficit has been compounded with weather variations, especially in West Africa."
