The outlook for the global chocolate market continues to deteriorate as Ghana, the second-largest producer of cocoa in the world, is considering delaying the delivery of up to 350,000 tons of beans until the following season as a result of bad crops, five sources told Reuters.
Due to a third year of subpar harvests in Ghana and Ivory Coast, which account for 60% of global production, cocoa has more than doubled in value this year alone. As a result, chocolate manufacturers worldwide are boosting costs for customers.
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Prior to this, the market projected that Ghana would roll forward about 250,000 metric tons of cocoa, or roughly half of its current harvest. Ghana’s cocoa authority, Cocobod, stated that the nation aimed to roll over “certain volumes, but not in those (350,000 ton) quantities”.
Unfavorable weather, bean diseases, and illicit gold mining—which frequently uproots cocoa farms—have devastated the nation’s cocoa crop.
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The small crop that is available for delivery in Ghana is being further depleted by Ghanaian farmers who are smuggling more beans to neighboring countries where they may sell them for more money than the state purchasing price.
Ghana typically sells between 750,000 and 850,000 tons of its crop, or around 80% of it, one year ahead of schedule.
Its yield did, however, drop to about 670,000 tons the previous season, and this season’s harvest is not anticipated to surpass 500,000 tons. The industry and traders worry that it might not improve much the following season either.
According to the International Cocoa Organization, this season’s worldwide cocoa production is expected to decrease by 10.9% to 4.45 million tons.
Because of this, chocolate manufacturers and processors will need to use their supplies of cocoa to meet their whole demand.
FUTURE SALES
A well-established system for the trading of cocoa is being undermined by the price increase.
Ghanaian authorities determine the lowest price at which traders can buy cocoa from farmers for the upcoming season by averaging their advance sales.
Ghana is having trouble with forward sales for the following season since some 350,000 tons of forward sold beans are missing from this season’s crop, according to traders. According to two reports, the nation has only exported 100,000 tons.
Cocobod will find it difficult to raise farmer prices next season based on these sales, since sources claim that the 100,000 tons and the 350,000 tons that will be carried over into the following season were sold for less than half of the current global cocoa prices.
Although Cocobod refrained from disclosing volumes or pricing, he stated that forward sales were proceeding as normal.
According to the sources, if prices don’t rise, farmers will probably be enticed to increase bean smuggling, plant other crops, or sell more of their land to gold miners.
