According to the International Cocoa Organisation’s (ICCO) latest report (October 2023), based on published grindings data from the European Cocoa Association (ECA), National Confectioners Association (NCA), and the Cocoa Association of Asia (CAA), total grindings for the 2022-23 season dropped by almost 4% from2,844,132 tonnes in the 2021/22 season to 2,739,982 tonnes.
“It is worth pointing out that though Q3.23 grindings are lower than those recorded in Q3.22, the decline in the former was less than expected. It is too early to view how demand is faring amid cocoa price increases and a slowdown in cocoa production,” the ICCO said.
From the beginning to the end of October 2023, based on the nearby cocoa futures (DEC-23 contract), prices increased by 12% in London from US$3,676 per tonne to US$4,102 per tonne. Similarly, at the London closing time, cocoa futures prices in New York rose by 9% from US$3,500 per tonne to US$3,822 per tonne.
In its report, the ICCO said that the downside to supply has emerged from several angles. Unseasonal heavy rains, particularly in West Africa, have prevented the drying of beans and led to degraded bean quality. Black pod diseases and swollen shoot virus due to the excess rains have also been reported in some cocoa regions – and flooding has also rendered major roads in some cocoa regions challenging to access.
“Should the weather revert to normal conditions for this time of the year, it is likely arrivals may improve as more beans may start to leave the farms for the ports,” said the ICCO.
So far, Ghana has yet to release its graded and sealed purchases of beans. Ghana’s producer price is about $211 tonnes above Cote d’Ivoire’s. As cross-border trading is nothing new within West Africa, beans are likely moving from Cote d’Ivoire to neighboring countries. This may be causing the current low levels of arrivals at ports in Cote d’Ivoire.
Emily Stone, founder and CEO of ethical cocoa supplier Uncommon Cacao, said: “We have already begun signing contracts for the 2024 harvest season, including in Ghana, where we are paying full market value, plus the Living Income Differential, plus the country differential, plus $700/MT premiums for Fair Trade, Organic, and Quality.
“We have signed contracts in Uganda, where the FOB price of quality organic cacao is increasing by 20%. We have long argued that cocoa is undervalued and are happy to pay higher prices, ensuring quality remains excellent and that higher prices are making their way to farmers.”
Stone said that chocolate makers would be wise to plan ahead for the rising costs of cacao in the next 12 months.
“The price of ABOCFA will rise quite substantially, as well as other popular origins like Öko Caribe, Semuliki Forest, and Tumaco. We will work diligently to ensure our efficiency as a business to offer you the best pricing…. We are committed to being a sustainable supplier and serving both cacao producers and chocolate makers over the long term,” she said.