2024-12-16 23:00:00
The new surge in cocoa prices that began a month and a half ago continues. It is fueled by concerns about production in Ghana and Ivory Coast. And this even if this year’s harvest promises to be better than last year’s, which fell by a quarter in the two world bean leaders.
Very smart is anyone who can say whether prices will rise to $12,000 a ton, their historic peak in April, and if so how quickly this level will be reached. But the rapid increase seen since early November illustrates the real stress in the market. What is causing this surge in prices is essentially the concern for the production of the two world leaders: Ivory Coast and Ghana.
One of the reference indicators for evaluating the harvest is the volume of beans arriving at the port of Abidjan and San Pedro, before shipping. This year is higher than last year: +34%, or 187,000 tons more at the end of the first week of December, according to statistics reported by the International Cocoa Organization (ICCO) – but 10% lower than two years ago. “There is a return to significant, but not record, quantities» summarizes the head of ICCO. The missing 10% is evidently enough to worry operators. Because this year, more than others, a part of the harvest will be used to honor an unspecified number of contracts that were unable to be realized last year due to a lack of beans.
Close the deficits
The question is therefore whether the current 2024/2025 harvest will be sufficient to make up the past deficit and meet this year’s needs. Current prices reflect this concern about supply, combined with dwindling inventories. These are the global stocks, in the warehouses of the producing countries and at destination, i.e. in particular the port stocks of Antwerp, Hamburg and Amsterdam, the stocks held by the producers and those floating at sea.
If they are important it is because these stocks act as a valve to compensate for a drop in supply. Today they would be equivalent, according to estimates, to 3 or 4 months of consumption. If they fall below the three-month mark, and this could happen during the next calculation communicated by the ICCO in February 2025, the tension could increase and prices rise a little further.
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