Gure weather destroys cocoa crops; prices skyrocket

Henry

Cocoa prices have soared in the past year after severe weather destroyed crops in Ghana and the Ivory Coast – the world’s two largest cocoa producers.

Cocoa is mainly used in the production of chocolate and its price has been breaking records almost daily in recent years.

“I have never seen such a harvest in 20 years… The rain spoiled our crops,” says Siaka Sylla, president of a trade cooperative of 1,500 farmers in Divo in the south of the Ivory Coast.

Cocoa prices have more than doubled since the start of 2023.

However, declining production was a major catalyst for the price explosion over the past 12 months.

According to local farmers, last July was particularly wet in the south of the Ivory Coast, just when plants were blooming. However, an increasing number of farmers in West Africa reported plant diseases due to the heavy rain, which favored the spread of black pod disease. This disease makes pods black and rotten.

The Ivorian regulator, the Coffee-Cocoa Council, has consequently suspended the sale of export contracts.

Industry estimates now indicate that cocoa shipments at Ivory Coast ports tumbled by 35% between October and the end of January compared to a year earlier.

“It is a very difficult harvest. We will perhaps fetch 1,900 tonnes compared to almost 3,000 tonnes last year,” says Sylla. “But there are cooperatives where it is worse; not even 200 or 300 tons.”

The cocoa market extended its meteoric rise this week.

The London price of cocoa reached a peak of £4 248 (about R101 000) per tonne on Tuesday and in New York the price of cocoa reached a 46-year high of $5 288 (almost R100 000) per tonne.

“It seems to be only a matter of time before the cocoa price in New York approaches the peak of $5 379 (about R102 000) per ton set in 1977,” says Carsten Fritsch, an analyst from Commerzbank.

The price of cocoa last year exceeded the previous highs of 2011 as the market was rocked by fears about the impact of post-election violence in the Ivory Coast.

Producers may also have new problems due to the revival of the El Niño-climate phenomenon that threatens West Africa.

“This means that the cocoa market can probably also expect a supply deficit in the current 2023-’24 harvest year, the third year in a row,” warns Fritsch.

“Dealers are worried about another short production year and these feelings were reinforced by El Niño which threatens West Africa’s crops with hot and dry weather,” says Jack Scoville, an analyst at the Price Futures Group.

Climate change is already a big challenge for farmers.

In Ghana, six regions grow the cocoa bean: the Eastern region, Ashanti, Brong Ahafo, Central, Volta and Western regions.

However, production has shifted to the west of the country due to declining soil fertility and fluctuating rainfall.

  • Cote d’Ivoire and Ghana together accounted for almost 60% of the 2022-23 global crop.