BY Onome Amuge.
The global cocoa market slipped on both sides of the Atlantic in June with prices of the nearby cocoa futures contract averaging $2,139 per tonne and ranging between $2,059 and $2,215 per tonne in London. In New York the JULY-22 contract traded at an average price of $2,396 per tonne, swinging between $2,291 and $2,522 per tonne.
The International Cocoa Organisation (ICCO), in its cocoa market report for June 2022, attributed the downward trend of cocoa futures during the month under review to the 2 percent appreciation of the US dollar and economic uncertainties.
During the first half of June, the front-month cocoa futures prices declined by 6 percent from $2,212 to $2,069 per tonne in London and by 8 percent from $2,522 to $2,329 per tonne in New York.
Although futures prices generally plummeted during June 2022, their development was marked by three distinct sequences. The ICCO report noted that this bearish trend in prices was driven by the strengthening of the US dollar, global economic concerns mainly stemming from steady inflation and a high level of inventories in the Exchange monitored stocks of cocoa beans.
Meanwhile, Certified stocks of cocoa beans increased from 171,330 tonnes to 176,740 tonnes in Europe and from 352,106 tonnes to 357,894 tonnes in the United States. This was followed by reports that levels of arrivals in Côte d’Ivoire and purchases in Ghana continued to be lower year-on-year. This was said to have contributed to the short-lived upward trend seen in the JUL-22 prices over the one-week period 16-22 June.
As at 19 June, cocoa arrivals in Côte d’Ivoire, the world’s largest producer, were reported at 1.943 million tonnes, down by 5 percent against 2.045 million tonnes recorded at the same period of the previous season.
In Ghana, the latest available information indicated that volumes of cocoa purchases were lower by 32 percent year-on-year from 961,000 tonnes to 651,000 tonnes.
During the last week of the month under review, the adequate meteorological conditions that prevailed in West Africa erased concerns regarding cocoa supply. Hence, the JUL-22 contract prices plunged 4 percent on both markets moving from $2,138 to $2,062 per tonne in London and from $2,376 to $2,291 per tonne in New York.
Information compiled from the weather database of Refinitiv showed that the cumulative rainfall and the average soil moisture for the cocoa growing areas in Côte d’Ivoire and Ghana, followed a similar trend for the current cocoa year and the two previous seasons. This evidence, according to the ICCO report, suggests that the current low level of arrivals and purchases in both countries are not necessarily attributable to the weather.
Having recorded no bottleneck in the haulage of cocoa upcountry and given the conducive meteorological conditions, other parameters like ageing cocoa trees or cocoa-related diseases as well as poor agricultural practices, were indicated to have contributed to reducing the yield of cocoa farms and subsequently lowering the level of arrivals and purchases in Côte d’Ivoire and Ghana, respectively.