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ICE cocoa bean prices soften m-o-m in March 2022 but the market remains fundamentally bullish

March 29, 2022

1 mins read

Cocoa bean futures prices at the InterContinental Exchanges (ICE) in London and New York (NY) softened m-o-m during March 2022, on the back of improved supply sentiment in Cote d’Ivoire, the world’s largest producer. The London benchmark price fell by GBP 74/MT (- 4.2%) to GBP 1,744/MT during the five-weeks ending 23rd March, while the NY price contracted by USD 168/MT (-6.1%) to USD 2,585/MT during the same period.

The Ivoirian government reported in late-March that 1.82 m tonnes of beans were sent to export terminals during the 2021-22 marketing year (MY) to-date (1st Oct ‘21- 20th Mar ‘22), representing a 4.0% y-o-y increase. This appeared to relieve market jitters related to potential supply tightness from Cote d’Ivoire and Ghana, which collectively account for approximately 70% of annual global cocoa bean production. However, it is unclear what proportion of the Ivoirian port arrivals comprised crop carried over from the large harvest in 2020/21, where shipping delays towards the end of the MY hampered the flow of Ivorian beans to end-user markets.

Notwithstanding, the six-monthly average bean price (Oct ‘21-Mar ‘22) at London increased by GBP 55/MT (+3.2%) over the previous six months, while the NY benchmark rose by USD 106/MT (+4.3%) half-on-half. Robust global demand for cocoa and semi-finished products, particularly powder, is expected through Q2 2022, based on easing COVID-19 fears, due to the success of vaccination programmes, alongside declining infection and death rates globally. This is caveated with macroeconomic uncertainty regarding the implementation of monetary tightening policies, particularly among Western Hemisphere markets, to tackle soaring inflation.

Some households may respond to reduced purchasing power by substituting perceived luxuries, such as chocolate, for staples like bread, meat and vegetables. Conversely, other shoppers may increase cocoa consumption in order to derive pleasure during difficult times.

Cocoa

 

Ibi Idoniboye
Ibi Idoniboye

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