Dry, hot weather 'raising concerns' for West African cocoa output - ICCO


Adverse weather is “raising concerns” for the mid-crop cocoa harvest in West Africa, the International Cocoa Organization said, as it flagged that Africa was behind a forecast for lower production this season.

The ICCO late on Wednesday, in its first forecasts for cocoa supply and demand in 2017-18, revealed that it was expected a decline of 110,000 tonnes, to 4.64m tonnes, in output for the season, which started in December.

That reflected the decline expected for output in Africa, seen falling some 110,000 tonnes to 3.52m tonnes, with falls expected for all major growing countries, including top producer Cote d’Ivoire, despite the seasonal Harmattan wind proving a mild one.

“Nevertheless, the dry hot weather conditions currently prevailing are raising concerns for the mid-crop,” the ICCO said.

The mid-crop harvest typically occurs between May and August in both Cote d’Ivoire and second-ranked cocoa producer Ghana.

‘Severe heat conditions’

The ICCO flagged “mixed weather conditions” for Cote d’Ivoire, which were “not portraying a clear outlook for the country’s production.

“Whereas some growing regions are reported to be satisfied with the rainfall and moisture levels, farmers in other areas have raised concerns of the severe heat conditions and their impact on the upcoming crop,” said the intergovernmental group, which is based in the Cote d’Ivoire capital, Abidjan.

The organisation also flagged that, at the cocoa price of 700 CFA francs ($1.27) per kilogramme guaranteed by the country’s sector regulator, “the majority of farmers could not afford fertilizers, insecticides and investment in good husbandry practices during the period leading to the start of the 2017-18 season”.

Ghana price cut ahead?

Ghana has maintained a higher guaranteed cocoa price this season, equivalent to about $1.70 per kilogramme.

Nonetheless, the ICCO highlighted a drop of some 30,000 tonnes to 560,000 tonnes in cocoa purchases in Ghana as of mid-January, “attributed to weather conditions, which although not bad, have still not been as favourable as those of the previous season”.

The organisation also flagged reports that Ghana’s relatively generous cocoa price was “having a toll on the country’s finances”, meaning the government “might implement a new price policy during the mid-crop period”.

‘Booming sector’

Meanwhile, cocoa demand in 2017-18 was seen growing by 86,000 tonnes year on year to 4.49m tonnes, driven by increases in bean-growing countries, which will take close to one-half their share of the world processing market.

“The recent increases in processing capacity in cocoa-producing countries, particularly those in Asia and Africa, are expected to lead to higher volumes of cocoa grindings at origin, to 2.132m tonnes, up by 103,000 tonnes, accounting for 48% of total world grindings,” the ICCO said.

Cote d’Ivoire processing volumes were seen growing by 23,000 tonnes to 600,000 tonnes, while those in Indonesia will grow to 480,000 tonnes – well ahead of raw bean production of 280,000 tonnes.

Indeed, in Indonesia “exports of semi-finished products have overtaken by far exports of cocoa beans as a result of the country’s booming cocoa processing sector”.

The extra volumes are coming at the expense of activity in Western countries.

“With origin processing following an upward trend, this has resulted in a reduction in processing in cocoa importing countries which is estimated at 2.355m tonnes for the current season.”

Stocks growth

The ICCO forecast a world production surplus in 2017-18 despite the weaker output expectation, and growth in consumption, although at 105,000 tonnes, the surplus was pegged well below that last season.

The estimate for the 2016-17 surplus was downgraded by 35,000 tonnes to 300,000 tonnes, returning to 2010-11 the title of the largest ever surplus year, and reflecting in the main an increase to consumption expectations.

World cocoa stocks were forecast at 1.83m tonnes at the close of 2017-18, equivalent to 40.8% of demand.


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