ICCO predicts 11% drop in global cocoa output, after El Niño effect

“Compared to the 2022-23 season, global cocoa supply is anticipated to decline by almost 11% to 4.449 million tonnes. Global cocoa demand is projected to decrease by almost 5% to 4.779 million tonnes,” the ICCO said in its first Quarterly Bulletin of Cocoa Statistics for the 2023-24 cocoa year.

This has caused the relentless rise of cocoa prices on the futures markets in London and New York as supplies become more stretched because of the outlook in Ghana and Cote d’Ivoire, which produce almost 70% of the world’s cocoa beans.

“Declining output in Ghana and Ivory Coast has pushed cocoa prices to historic highs. As a trader, I deal with unstable demand and prices, with futures surpassing £5,000 and $6,000 per tonne. Prices remain high partly due to weather concerns that El Niño could further hurt global production like in 2016,” said Jim Roemer, founder of Best Weather Inc. and the WeatherWealth newsletter.

EUDR

He said he is also concerned about the long-term sustainability of Ghana’s cocoa production, especially with the EU’s upcoming deforestation regulation (EUDR) that could limit output if farms don’t comply.

COCOBOD, Ghana’s cocoa regulator, has drastically cut its 2023-24 production forecast to just 650,000-700,000 metric tons – a 14-year low, blaming smuggling and bad weather. There are reports that some Ghanaian farmers now say they can’t fulfil contracts for a second straight season.

“As the number two global producer, this is seriously concerning,” said Roemer.