6/13/2024–|Last updated: 6/13/202401:09 PM (Mecca time)
Ghana, the world’s second-largest cocoa producer, is looking to postpone deliveries of up to 350,000 tons of this commodity for next season due to poor harvests, five sources told Reuters, in a new worsening of the outlook for the future.
As a result, chocolate makers around the world have raised prices for consumers after the value of cocoa more than doubled this year alone following a third year of poor harvests in Ghana and Ivory Coast, which are responsible for 60% of global production.
Market estimates previously expected Ghana to supply about 250,000 metric tons of cocoa, equivalent to about half of its current crop. Cocopod, Ghana’s cocoa regulator, said the country was looking to increase “some quantities but not to this size (350,000 tons)” after the country’s cocoa crop was damaged by bad weather, disease and illegal gold mining, resulting in many deaths. Sometimes cocoa farmers are displaced. Ghanaian farmers are also smuggling more cocoa to neighboring countries to sell at prices higher than the government purchasing price, eating into what little crop is available for delivery in Ghana.
Five informed sources said Ghana had previously sold 785,000 tons worth of cocoa for the current 2023-2024 season (October-September), but was expected to be able to deliver only about 435,000 tons.
Ghana regularly sells about 80% of its crop after one year, which is usually between 750 and 850 thousand tons. However, production decreased to about 670 thousand tons last season, and it is not expected to exceed 500 thousand tons this season. Traders and industrialists fear that prices may not recover significantly next season either.
The International Cocoa Organization expects global cocoa production to decline by 10.9% to 4.45 million tons this season. This means that chocolate manufacturers will have to rely on cocoa stocks to fully cover their needs.
Higher prices could derail a long-established cocoa trade mechanism. Authorities in Ghana use their average forward sales to determine the minimum price at which traders can buy cocoa from farmers the following season.
Traders said that with about 350,000 tons of the forward-sold crop disappearing from this season’s crop, Ghana is facing difficulties in forward sales for next season. Two sources said the country sold only 100,000 tons.
The 100,000 tonnes, which will be released next season, were sold at less than half of current global cocoa prices, meaning Cocopod will struggle to increase farmers’ prices next season based on these sales, the sources said.
Cocopod said forward sales were rising as usual, but declined to disclose volumes or prices. The sources said failure to raise prices would likely encourage farmers to increase cocoa smuggling, grow other crops or sell more of their farms to gold miners.
