The International Cocoa Organization underlined fears of a double whammy to Cote d’Ivoire cocoa output this season from the knock-on effects of rains and lower prices, as it flagged forecasts of a weaker world production surplus.
The comments came even as the ICCO reduced by 36,000 tonnes, to 335,000 tonnes, its estimate of the world cocoa output surplus in 2016-17, although this represented increased ideas of consumption rather than production setbacks.
For 2017-18, which started in October, the intergovernmental highlighted “the expectation of a lower supply surplus, as excess rainfall in West Africa is reported to have had an impact on the main crop production in the region”.
The main crop harvest, which started in October, accounts for the great majority of output in Cote d’Ivoire and Ghana, which in turn are responsible for more than 60% of the world cocoa harvest.
‘Rainfall spread diseases’
In Cote d’Ivoire, which itself produced 2.01m tonnes of cocoa in 2016-17, “there are concerns about the impact of heavy rainfalls that occurred during October,” said the ICCO, which this year switched its headquarters to Abidjan, the country’s capital.
“The excess rainfall is reported to have spread diseases, including brown rot and black pod disease, which could negatively affect the crop.”
“Moreover, at the current farmgate price,” which officials have slashed to 700 CFA francs 9$1.27) per kilogramme, “the majority of farmers could not afford fertilizers, insecticides and investment in good husbandry practices during the period leading up to the start of the 2017-18 season.”
The organisation flagged expectations of an, unspecified, drop in Cote d’Ivoire cocoa output this season, although the result would depend on the severity of the seasonal Harmattan wind die imminently to return, bringing in dry wind from the Sahara.
‘Concerns over political unrest’
For Ghana by contrast the ICCO, while stopping short of forecasting whether output in 2017-18 would exceed last season’s 970,000-tonne production, flagged the “government’s commitment to cocoa farmers”, evident in a decision to hold the guaranteed farmgate price at the equivalent of about $1,735 a tonne.
The organisation pointed to the undertaking by Cocobod, the country’s sector regulator, of “efficiency and productivity-enhancing interventions, despite the challenges of aging farmers and the detriment of ‘galamsey’”, or illegal mining, which attracts land and workers away from cocoa.
Meanwhile, in Cameroon, which produced 240,000 tonnes of cocoa last season, the ICCO reported “favourable weather conditions” for the 2017-18 crop, but a threat from political unrest, with demands by some English-speaking regions for autonomy.
“There are concerns that political unrest in the country’s top cocoa producing southwest region could have a negative impact on cocoa deliveries.”
For Indonesia, which harvested 290,000 tonnes of cocoa last season, the organisation noted reported that this season “cocoa production is likely to fall, as farmers reduce the size of cocoa plantations and switch to other crops”.
‘Surge in grinding activities’
The comments came as the group cut by 21,000 tonnes, to 1.76m tonnes, its forecast for world cocoa inventories at the close of 2016-17, although this still represents a rise of 335,000 tonnes year on year.
The downgrade reflected an upgrade of nearly 70,000 tonnes, to a record 4.35m tonnes, in the forecast for world grindings, which was only partly offset by output increases to countries including Ghana and Brazil.
The organisation reported a “surge in grinding activities, especially in cocoa-producing countries such as Côte d’Ivoire and Indonesia.
The estimate for last season’s Côte d’Ivoire cocoa grind was upgraded by 37,000 tonnes to 577,000 tonnes, with that for Indonesia’s processing volume raised by 34,000 tonnes to 454,000 tonnes.