Adsense Skyscrapper

ICCO expresses worry over shortfalls in cocoa prices

0

The International Cocoa Organization (ICCO) has stated that since the start of the season, cocoa prices have generally not gone through any noticeable movement although prices within the broader commodity market have witnessed significant ascending trends.

Accounting for around 60% of global production, the ICCO noted that the shortfall in cocoa arrivals in Côte d’Ivoire and purchases in Ghana, coupled with an increase in global demand which resulted in a three-digit supply deficit should have normally supported cocoa prices for the current season.

However, the Organization disclosed that this is not the situation at the moment.

The ICCO indicated that cocoa supply, demand and stocks are among the various factors driving cocoa prices but these factors have not moved in tandem with recent developments in prices so far this season.

In its Cocoa Market Report for May 2022, the ICCO stated that as of June 4, 2022, arrivals of cocoa beans at Ivorian ports were estimated at 1.926 million tonnes, lower by approximately 5.1% compared to the volume of 2.027 million tonnes recorded during the corresponding period of the 2020/21 cocoa season.

The ICCO also reported a significant decline in cocoa production in Ghana of about 247,000 tonnes in the 2021/22 crop season.

“In neighboring Ghana, the 2021/22 crop is reported to witness a staggering drop to about 800,000 tonnes compared to the historic volume of 1.047 million tonnes recorded during the 2020/21 crop year”.

Stocks in Exchange

Notwithstanding the reduction in supply for the ongoing 2021/22 season, stocks of cocoa beans held in ICE Futures licensed warehouses in Europe and the United States are generally high compared to the past season.

“This observation is partly due to the 2020/21 record production which contributed to the high level of carryover stocks held in warehouses on both sides of the Atlantic for the 2021/22 season.

“Hence, the reduction in cocoa production for the 2021/22 season does not seem at present to be reflected in the level of stocks held in the Exchange licensed warehouses” ICCO indicated.

Compared to the levels at the start of the season, cocoa bean stocks in Exchange licensed warehouses in Europe have increased by 8% from 157,556 tonnes to 170,690 tonnes.

Over the same time frame, in the United States, stocks of cocoa beans held in Exchange licensed warehouses have declined by 5% from 350,340 tonnes to 331,564 tonnes, according to statistics from the ICCO.

Global Pressure

The report highlighted that at the end of April (which is the latest available data as at the time of writing), monthly inflation rates for all items were 8.1% and 8.3% in the European Union and the United States respectively, representing by far the highest level of monthly inflation rate reached over the last ten (10) years.

In addition, the industrial price index of manufactured chocolate products increased by 5.0% in the European Union and by 7.7% in the United States, making chocolate manufacturing more expensive compared to the past few years.

Some manufacturers like Mondelez International (owner of Cadbury Dairy Milk) indicated that the size of sharing bars will be reduced by 10% while maintaining the same price. The ICCO hinted that others are likely to follow suit or even increase the retail prices of their products.

Inflation, which is reputed to weaken the purchasing power of consumers, could possibly constrain the consumption of non-essentials and luxury goods including cocoa products should the situation persist, the ICCO warned.

Leave A Reply

Your email address will not be published.