Weather situation in Ivory Coast Boosts Cocoa
Ivory Coast farmers reported that strong gusts of wind have ravaged the cocoa trees
Quick overview
- A short-covering rally in cocoa trades occurred due to weather issues in West Africa, with strong winds damaging cocoa trees in Ivory Coast and a prolonged dry spell affecting Nigerian farmers.
- Nigeria's cocoa exports increased by 24% year-on-year, making it the world's fifth-largest cocoa producer, despite ongoing supply uncertainties.
- Cocoa stockpiles have partially recovered, leading to weaker prices, while NY cocoa reached a two-and-a-half-month high amid slowed exports from Ivory Coast.
- Recent surveys indicate poor crop development in Ghana and Ivory Coast, with the mid-crop estimate for Ivory Coast projected to be 400,000 MT, a 9% decrease from last year.
The weather problem in West Africa led to a short-covering rally in cocoa trades yesterday. Ivory Coast farmers reported that strong gusts of wind have ravaged the cocoa trees, whilst Nigerian cocoa farmers report that there are no ripe pods on trees and flowers yet to bear fruit because of a prolonged dry spell.
Cocoa prices also suffered carryover slumps this week when Bloomberg reported Nigeria’s March export increased 24% year-on-year to 27,564 MT. This combination of regions makes Nigeria the world’s fifth-largest cocoa producer.
A recovery in cocoa stockpiles is weakening prices. Since falling to a 21-year low of 1,263,493 bags on January 24, ICE-monitored cocoa reserves at US ports have partially increased to 2,036,303 bags, up from a 6 1/2 month low of 1,982,000 bags.
NY cocoa reached a two-and-a-half-month high last Friday, due to supply uncertainties as cocoa exports from the Ivory Coast have substantially slowed.
Cocoa farmers from the Ivory Coast transported 1.5 MMT of cocoa to the ports from October 1 to April 27. This is an increase of 12% compared to last year’s figure.
Rabobank claims that recent surveys of cocoa farmers in Ghana and Ivory Coast have revealed dismal results, and that crop development has been restricted by late-arriving rains in the area. The lesser of the two yearly cocoa harvests, the mid-crop, usually begins this month.
The consensus estimate for this year’s Ivory Coast mid-crop is 400,000 MT, a -9% decrease compared to last year’s 440,000 MT,
Cocoa prices fluctuated, moving lower after chocolate maker Mondelez International reported weaker-than-expected Q1 sales. The firm also commented that consumers seem to be scaling back on snack purchases due to high economic uncertainty around the globe
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