Cocoa prices go up the roof due to shortage fears across Africa

International cocoa prices have increased over the past few months due to fear of cocoa shortage.

Leeuwner Esterhuysen, Economist at Oxford Economics Africa says the national industry regulator, Cocobod has made a call that they will determine how much of the 2024/2025 crop can be sold based on total output.

“Cocobod refers to speciality cocoa, which are Fairtrade, UTZ, Rainforest Alliance certification, and traceable beans. These beans will be allocated equitably among buyers.”

Fear of cocoa shortage

He says the statement by Cocobod to allocate cocoa equitably has sparked fear that Ghana’s crop may not recover as had hoped, which has resulted in an uptick in cocoa prices.

“Ghana has postponed the delivery of at least 250 000 tonnes of cocoa from the current season to the 2024/2025 season, which runs from October 2024 till September 2025.”

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Cocoa harvest season

Ghana and Côte d’Ivoire have faced unfavourable weather conditions in the past. However, Côte d’Ivoire says it expects its harvest season to rebound to two million tonnes next season, from a predicted 1.8 million tonnes by the end of the current season.

Ghana expects production to increase from 425 000 tonnes this season to about 700 000 tonnes next season. “The fact that next season’s harvest is already being rationed does, however, suggest that this projection is too optimistic.”

He says in the past two seasons, Ivorian cocoa production was around 2.2 million tonnes, while Ghana’s average output was at 669 000 tonnes.

“Côte d’Ivoire sold about 800 000 tonnes of next season’s crop on the forward market before forward sales were halted by the Coffee and Cocoa Council (CCC) earlier this year due to the ongoing supply crunch.”

Oxford Economics Africa’s view

Economists at Oxford Economics are of the view that Cocoa output in Côte d’Ivoire and Ghana is unlikely to recover this year, which will weigh on the countries’ respective external positions

“Cocoa prices are set to remain volatile over the near term as any positive or negative signalling in the market is likely to set prices off in whichever direction.”

They are of a view that supply concerns appear largely priced in, and market players remain positive that the next main harvest season will yield greater output.