ADVERSE weather in West Africa could cause cocoa output in Ghana, the world’s second-largest producer, to fall short of consensus for a second consecutive year, local traders and exporters said.
Cocoa futures on the Intercontinental Exchange (ICE) are near their highest in three years, driven partly by overly dry, hot winds, which have also damaged the crop in neighbouring Cote d’Ivoire, the world’s top cocoa producer.
Four local traders and exporters, speaking on condition of anonymity, said they see the 2019/2020 Ghanaian crop at between 790,000 tonnes and 820,000 tonnes — a shortfall that if realised could help drive global prices higher. It is well short of an 875,000 tonnes consensus forecast in a Reuters poll in late January.
A source at Ghanaian cocoa regulator Cocobod said the weather is a major concern but declined to discuss numbers.
‘It has not been raining for more than four months and the heat is so strong there are very few flowers, cherelles [young cocoa pods] and pods in the fields,’ said an Accra-based exporter.
In 2018/2019, Ghanaian cocoa output totalled 815,000 tonnes, according to the International Cocoa Organisation (ICCO), far below the international body’s initial projection of 900,000 tonnes issued in February 2019. The ICCO is expected to publish its first projections for 2019/2020 crops later this month.
Some analysts question the extent to which this season’s Ghanaian crop will miss consensus forecasts.
‘People have been reducing their numbers but not by 50,000 tonnes. Arrivals so far have been quite good and at this stage, [there’s only] the mid crop and tail-end of the main crop [left],’ an analyst at a major chocolate maker said.
Cocoa arrivals at Ghanaian ports stood at 596,000 tonnes from October 1 — the start of the season — until January 16, up from 591,000 tonnes the same period of the previous season, official figures show.
But local exporters are concerned. The director of a European company based in Accra said production will disappoint because the recent dry spell has reduced the crop. ‘We [have been] forced to lower our predictions,’ he said.
Ghana and Cote d’Ivoire produce more than 60 percent of the world’s cocoa. Both countries’ output has been hit by the weather, but the situation in Cote d’Ivoire is more severe as farmers and middlemen there have been hoarding in anticipation of higher prices next season, a Europe-based trader said.
The two countries have introduced a $400 a tonne living income differential, or premium, for their 2020/2021 cocoa sales in a bid to guarantee higher prices for farmers and combat pervasive poverty.
It is difficult to hoard in Ghana because the market is so tightly controlled by the government, the Europe-based trader said.