Cocoa surplus amid pandemic conditions weakens market prices

THE INTERNA TIONAL COCOA ORGANISATION (ICCO) has released its latest market report, in which he notes that ce surplus of supplies is impacting negatively on cocoa prices amid the ongoing covid pandemic.

As Ivory Coast-based industry body’s latest study showers, prices on both the London and New York futures cocoa commodity markets slipped on a downward trend against the previous year’s results.

The ICCO confirmed that nearby contract prices averaged $2,343 per tonne, down seven per cent compared with the average price of $2,516 per tonne for the first position contract seen a year earlier in London.

Meanwhile, in New York, nearby cocoa contract prices averaged $2,528 per tonne in January 2021, 6 per cent lower compared to $2,675 per tonne recorded over the same period of the previous crop year.

The situation has also been compounded by market reports which revealed that around 150,000 tonnes of beans, an estimated nine per cent of the typical harvest, had yet to find a buyer, when typically it would have had no trouble in selling its complete stock, further weakening prices.

In addition, the ICCO also noted that cocoa butter prices tumbled, while the opposite occurred for cocoa powder, which appeared to buck the negative trend.

According to the latest analysis, demand for cocoa powder is on the increase; thereby contributing to prices rising. In cocoa processing, if the quantity of powder manufactured increases, so do butter stocks. Thus, the lower demand for butter and increased butter stocks have led to price declines.

This season, the governments of Ivory Coast and Ghana have jointly overseen the introduction of the Living Income Differential (LID), a $400 per tonne premium paid by manufacturers to assist small holder farmers towards earning a sustainable wage.