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Ghana, the world’s second-largest cocoa producer, is strategically delaying the delivery of up to 350,000 tons of cocoa beans to next season. This move, driven by poor crop yields, aims to stabilize the market amidst a challenging global supply landscape, according to five sources speaking with Reuters.



As the value of cocoa more than doubled this year due to consecutive poor harvests in both Ghana and Ivory Coast—who together account for 60% of global cocoa production—chocolate manufacturers are adjusting by raising consumer prices.



Initially, the market anticipated that Ghana would defer around 250,000 metric tons of cocoa, representing nearly half of its current crop. However, COCOBOD, Ghana’s cocoa regulatory body, clarified that while some volumes will be rolled over, they will not reach the speculated 350,000 tons.



The country’s cocoa sector has been severely impacted by adverse weather conditions, bean diseases, and illegal gold mining activities, which displace cocoa farms.



Additionally, Ghanaian farmers are increasingly smuggling beans to neighboring countries to obtain higher prices than those offered by the state purchasing program, further diminishing the available crop for Ghana’s deliveries.



Insiders revealed that Ghana had pre-sold approximately 785,000 tons of cocoa for the 2023/24 season (October-September) but is now expected to fulfill only about 435,000 tons.



Typically, Ghana sells around 80% of its crop one year in advance, usually totaling 750,000-850,000 tons. Last season, however, the crop yield dropped to around 670,000 tons and is projected to remain below 500,000 tons this season. There are concerns within the trade and industry sectors that a significant rebound may not occur next season.



The International Cocoa Organisation forecasts a 10.9% decline in global cocoa production, bringing it down to 4.45 million tons this season. Consequently, cocoa processors and chocolate companies will need to rely on existing cocoa stocks to meet their demands.



FORWARD SALES



The ongoing price surge is disrupting traditional cocoa trade mechanisms. Ghanaian authorities use the average price of forward sales to determine the minimum purchase price for traders in the subsequent season. Due to the shortfall of approximately 350,000 tons in forward-sold beans from this season’s crop, Ghana faces challenges in securing forward sales for the next season. Sources indicate that only about 100,000 tons have been sold forward so far.

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Exclusive: Ghana Implements Strategic Cocoa Delivery Delay Amid Global Supply Challenges

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AUTHOR: CHRISTOPHER A. RANSON

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