Com-Watch - Issue 37 - June 2014

COMMODITY NEWS
COCOA
General
Higher West Africa Farmer Prices Won’t Fill Global Cocoa Gap
Ivory Coast expected
to raise farmer price
above 800 CFA
Farmers hope for
prices between
900/1,000 CFA
ICCO forecasts global
2013/14 deficit of
115,000 tonnes
West African cocoa output is unlikely to rise enough to stave
off a global supply deficit forecast until at least 2015/16.
Global cocoa market prices are near 2-1/2-year highs, but
fixed prices in top growers Ivory Coast and Ghana are seen
by some as too low to incentivise higher output, meaning
world prices will have to stay higher for longer. A source at
Ivory Coast’s finance ministry noted the country would raise
the fixed farmer price above 800 CFA F/kg [USA$1.67] for the
season starting on Oct. 1, from the current season’s 750 CFA
F.
The Ivorian government abandoned a decade of sector
liberalisation at the start of the 2012/13 season and began
auctioning its anticipated crop to guarantee a minimum price
for farmers. That price was fixed at 750 CFA francs [$1.57] per
kg at the start of the country’s main crop harvest in October
and was maintained into the April-to-September mid-crop.
Ivory Coast had finished selling its 2013/14 cocoa crop by
early January, auctioning off more than 1.45 million tonnes of
beans, taking advantage of world cocoa prices that rose 20 %
last year on fears of a global supply deficit. Forward sales for
the 2014/15 season were already at 780,000 tonnes at that
point.
A high farmer price for next season’s Ivorian crop is likely to
pile pressure on neighbouring Ghana. As much as 100,000
tonnes of Ghanaian cocoa have been trafficked into Ivory
Coast so far this season and the situation could worsen if the
price gap between the 2-countries widens further.
Ghana has had a fixed price for decades and is expected to
raise it in the coming season. Traders and analysts, however,
said the anticipated increases were not enough to encourage
more output from farmers.
The world already faces 2-consecutive deficit years, with the
International Cocoa Organization [ICCO] forecasting a 2013/14
global cocoa shortfall of 115,000 tonnes. Ivorian farmers
reinforced the idea that they would need a price closer to
1,000 CFA francs to ramp up production.
Analysts forecasts a global 2013/14 cocoa deficit. Liffe
cocoa futures rose around 20% in 2013, supported by the
gap between supply and demand. Around 100,000 tonnes
of additional cocoa production is needed each year to meet
growing demand, and traders said cocoa-growing countries
with liberal markets had already responded to higher world
prices.
[Reuters 16/05/14]
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