Cocoa bean price in London started to decline in December 2019, as first estimates for the new season, (marketing year starting on 1st October) indicate higher output for 2019/20. Prices declined by almost 2% m-o-m but remain 5% higher than the level seen last year in December.
The ICCO (International Cocoa Organisation) forecast the new West African harvest to increase as Ghana’s and Ivory Coast output should continue to grow. The first export statistics from Ivory Coast shows a growing export pace y-o-y, with 446,000 tonnes exported between the 1st October and the 11th November - an increase of 6%. Similarly in Ghana, favourable weather conditions are likely to see a higher harvest in 2019/20 compared to the previous season, which was marked by the spread of diseases following higher than average precipitations during the fruit development stage.
The higher output forecast for 2019/20 is contrasting with the various African cocoa organisations’ aim to avoid lower global cocoa bean prices by implementing a cocoa bean production ceiling in West Africa. However, the lack of alternatives offered to cocoa farmers is likely to prevent lower cocoa bean output in the short-term.
Yet, the strong global demand, especially in Asia and in producing countries investing on their own processing industry, is expected to remain a key support driver of cocoa bean prices in the next few months and would offset the decline in prices due to high supply.