Cocoa demand exceeds supply 2 months into new season

Two months into the 2019/2020 cocoa crop season, demand continues to expand exponentially reflecting a steady growth of cocoa processing in Asia and Oceania as well as cocoa producing countries themselves.

Data from the International Cocoa Organization (ICCO) indicates the during the last crop season, 2018/2019, the world grindings increased by 4.6 percent. The grindings reached 4.807 million tonnes, up by 211,000 tonnes over the previous year.

Processing activities are estimated to have grown by 14.3 percent to 1.201 million tonnes in Asia and Oceania and by 2.9 percent to 991,000 tonnes in Africa, whereas the Americas’ increase was of 2.8 percent to 897,000 tonnes. Grindings in Europe lightly progressed by 0.5 percent from the previous season to 1.719 million tonnes.

At the end of the second month of the 2019/20 crop year, arrivals in both Côte d’Ivoire and Ghana were established at levels lower than the volumes reached a year ago.

This is happening at time when regulators of both countries have set out plans to introduce a cocoa production ceiling to support global prices and discourage overproduction. This is to address concerns of cocoa buyers of a possible excess production, due to the fixed “living income differential (LID), which may lead to lower prices.

The plans to introduce production ceiling comes after the two nations, who produce two-thirds of the world’s cocoa, imposed a fixed “living Income differential (LID)” or premium of US$ 400 a tonne in July on all cocoa sales for the 2020/21 season.

In Ghana, cumulative arrivals of graded and sealed cocoa were seen at 208,000 tonnes by 14 November 2019, down by one percent from 210,000 tonnes reached a year earlier.

As at December 1, 2019, cumulative arrivals of cocoa beans at Ivorian ports were reported at 694,000 tonnes, down by two percent from 708,000 tonnes attained during the same period during the 2018/19 season. A total of 781 million tonnes have been supplied from Côte d’Ivoire in the past two months.