Global cocoa prices hit $10,000 again on Futures commodities markets
Pic: Cocoa farming in Ghana. Pic: Shutterstock.
Cocoa prices on the commodities market once again tipped into the $10,000 a tonne price point, amid renewed pressure in the wake of an ICCO confirmation that crop supplies in key Ghana and Ivory Coast are expected to continue to experience a worse than anticipated deficit of supply, writes Neill Barston.
As previously reported, the industry reacted with extreme concern as results hit record-high nominal values of more than $12,000 a tonne at the end of April this year for the Futures markets in New York, well over three times the values achieved just 18 months before.
Notably, farm gate pay increases were awarded in both Ghana and Ivory Coast to farming cooperatives, which took their earnings to the equivalent of around $2,470 a tonne – yet this is still less than a third of the price being fetched on Futures markets.
Significantly, as Confectionery Production has previously reported, the major price rises in the past few months have in part been attributed to investment and hedge fund speculation that has fuelled the rapidity in prices – though market insiders have disputed the extent of this as a factor.
Conversely, uncertainties in the market have led to a number of sector observers calling for systemic change to the present models of trading cocoa, which have resulted in core markets in West Africa struggling to adapt to volatile market conditions. It has been suggested that a radical shift towards a decommoditising the market is required in order to ensure a living wage for farmers – whose wages in Ghana and Ivory Coast have lagged significantly behind rates being achieved in other African nations.
As the ICCO noted, global production and grindings are projected to decline by -11.7% to 4.461 million tonnes and by -4.3% to 4.855 million tonnes, which has further complicated the picture, with consumers around the world feeling the pinch as manufacturers pass on the costs to shoppers. As previously reported by Confectionery Production, seasonal premium ranges were reported to be up in price by more than 30% last December. The same was also seen recently for Easter, as manufacturers faced higher processing costs, with both cocoa and sugar prices continuing to remain high against previous levels.