Côte d'Ivoire and Ghana, in common front since 2019, facing industrialists, have caused the price of the cocoa bean to soar even as demand is at half mast, gripped by the covid-19 pandemic. Thus, on the New York market, the ton of cocoa for delivery in December, a contract which is therefore coming to an end soon, has climbed by more than 25% since last Friday, to peak at 2,915 dollars…

By Albert Savana
The FinancialAfrik.com suite

Cocoa: prices soar because of the conflict between producers and industrialists

London (awp/afp) – Tensions between cocoa-producing countries and manufacturers over the purchase price of beans have led to a surge in prices on the international market, even as demand is at half mast with the Covid-19 pandemic. 19.
On the New York market, a ton of cocoa for delivery in December, a contract which is therefore coming to an end soon, has risen by more than 25% since last Friday, to peak at 2,915 dollars, at a level not seen since. the start of the pandemic.

This is not a cause for celebration for cocoa-producing countries, warn market observers: this jump in prices is on the contrary the consequence of the conflict which opposes them to their buyers, the chocolate industry.

“The dispute over prices prompted buyers to turn to other, cheaper sources, so they fell back on the New York market,” summarizes Andrew Rawlings, analyst at Rabobank.

In West Africa, Ghana and Côte d'Ivoire, which represent two-thirds of world production, have joined forces since 2019 to try to obtain more from the chocolate industry, on the model for example of the Organization of Petroleum Producing Countries, OPEC.

Abidjan and Accra had obtained from their buyers, such as Nestlé, a premium of 400 dollars per ton of cocoa, applied from the 2020-21 campaign, which began in October.

But between the agreement and the harvest, the Covid-19 pandemic has ravaged global demand, and manufacturers are reluctant to see prices rise when supply is abundant.

“There was a request to lower the premium, which was apparently refused. One of the confectionery giants has decided to turn to the reserves "specific to exchanges such as ICE in New York, instead of buying directly from the producing countries as the big manufacturers usually do, explains Judith Ganes, commodity market analyst.

“It surprised the other market participants because the quantity was so large that they had to obtain an exemption from the operator,” she adds.

According to the Bloomberg agency, which cites anonymous sources who witnessed the transaction, the buyer is Hershey, one of the largest American confectioners.

Contacted by AFP, Hershey was not immediately available, as were the number one and number 2 in the world of chocolate, the American confectioner Mars and the Italian Ferrero.

"The result is that prices have jumped even as African producers still have some of the current crop to sell," said SaxoBank analyst Ole Hansen.

On the New York market, the contract for delivery in March, less directly affected, saw its price jump nearly 16% to 2,740 dollars. In London, a ton of cocoa was traded on Friday for 1,829 pounds sterling, against an increase of 13.5% compared to last week.