What You Need to Know
Cocoa traders have resumed purchases from Ivory Coast, the world’s largest producer, after the country agreed to sell at global prices, abandoning a price premium policy. This shift comes as the Coffee and Cocoa Council allows pre-contracts for the secondary crop without the previously imposed premiums, which had caused a significant backlog in sales.
Africa-Press. Cocoa traders have resumed purchases from Ivory Coast, the world’s largest producer, after the country agreed to sell at global prices, abandoning a price premium policy that had led to a standoff with buyers and left hundreds of thousands of tons unsold, according to a local source.
The Coffee and Cocoa Council in Ivory Coast has allowed pre-contracts for the secondary crop, which begins in April, without applying the premiums that were intended to support farmers’ incomes and ensure quality, as reported by a local source citing unnamed sources.
Companies had refrained from purchasing due to these premiums, which raised prices by between $250 and $470 per ton above global futures.
This shift marks a significant adjustment in Ivory Coast’s policy, which, along with Ghana, launched a ‘living income’ premium of $400 per ton in 2020 to improve farmers’ returns, alongside a separate quality-related premium.
This change reflects the pressures faced by major cocoa-producing countries amid declining demand due to sharply rising prices, as New York futures approached $13,000 per ton at the end of 2024 before experiencing a sharp decline.
The secondary crop accounts for about a quarter of annual production, estimated this year at between 400,000 and 450,000 tons, according to a local source.
Cocoa futures in New York traded near $3,100 per ton on Wednesday, after dropping to 2023 levels in the previous session.
When will the decline in cocoa prices affect chocolate?
Producers and analysts expect that cheaper cocoa will begin to reach supermarket shelves in the second half of this year, though this is uncertain, meaning that families already struggling with rising food prices, from meat to coffee, will have to consider whether chocolate remains affordable, according to a report published by a local source last December.
The price surge in 2024 had a significant impact on the cocoa industry, prompting everyone from canned food companies to small artisan chocolate makers in Europe and the U.S. to secure sufficient cocoa supplies and balance costs with profits, with some finding themselves struggling to survive.
In 2020, Ivory Coast and Ghana introduced a ‘living income’ premium of $400 per ton to improve farmers’ earnings and ensure quality. However, rising global cocoa prices led to decreased demand, prompting a reevaluation of these policies. The recent decision to eliminate price premiums reflects the pressures faced by major cocoa-producing countries amid fluctuating market conditions.
