The global cocoa market continues to face challenges, with prices falling by 9% in London and 6% on the New York exchange during October, 2021 as excess supply concerns remain a major factor, according to the International Cocoa Organisation (ICCO).

The sector’s woes this year mimics that of last year during the impact of the coronavirus pandemic, with prices coming under pressure amid fluctuation in demand around the world.

According to the ICCO monthly report, the global cocoa market was bearish during the first month of the 2021/22 cocoa season. On both the London and New York markets, prices of the front-month cocoa futures contract witnessed marked declines.

“Price decline was as a result of excess supply despite the year-on-year increase in grindings for the third quarter of 2021 reported by the main regional cocoa associations.

“Compared to their levels recorded in October 2020, origin differentials paid over prices of the six-month forward cocoa contract in Europe and the United States for Ghana, Ivory Coast, Ecuador and Nigeria followed a downwards trend in October 2021.”
ICCO Report

Cocoa Differentials of producing countries fall

On the European market, the differential for Ghanaian cocoa averaged $333 per tonne in October 2021, down by 50% compared to US$672 per tonne recorded in October 2020. Likewise, the origin differential decreased by 59% from $527 to US$215 per tonne for Ivorian cocoa beans.

In the US, cocoa beans from Ghana recorded a differential of US$420 per tonne in October 2021 against US$614 per tonne during October 2020. Over the same period, the premium applied to Ivorian cocoa beans fell by 33% from US$481 to US$320 per tonne.

According to the report, premiums received for Ecuadorian beans in the U.S. dropped by 39% from US$231 to US$142 per tonne. In the same vein, a 40% reduction from US$407 to US$244 per tonne was recorded in the origin differential for Nigeria.

At the end of the 2020/21 cocoa season, the cumulative grindings of European Cocoa Association (ECA) members totalled 1,434,631 tonnes, up by 50,658 tonnes from the level reached at the end of the previous season.

In South-East Asia, cumulative grindings soared by 3% year-on-year to 863,239 tonnes in 2020/21. Over the same period, grindings in North America rose by 6% from 455,002 tonnes to 483,117 tonnes.

Over the first ten months of 2021, 150,430 tonnes were graded on the ICE Futures Europe, representing a 39% growth compared with 108,590 tonnes of cocoa graded over the corresponding period of the previous season.

Furthermore, the quantity of Cameroonian cocoa beans graded at the exchange was reduced from 52,110 tonnes to 49,200 tonnes.

Cocoa Powder Prices go up

Despite the abysmal performance of cocoa bean, prices of cocoa powder went up in October 2021. Prices of cocoa powder increased in October 2021 compared to their values recorded one year earlier.

Cocoa powder prices went up by 58% from US$3,058 to US$4,837 per tonne in the United States in October 2021. Over the same period in Europe, powder prices increased by 27% from US$2,825 to US$3,584 per tonne.

However, prices of cocoa butter remained virtually flat at US$5,363 per tonne in Europe, albeit, strengthened in the United States by 7% moving from US$5,374 to US$5,729.