Ghana is considering postponing the delivery of up to 350,000 tons of beans to the next season due to subpar crops, according to five sources informed by Reuters.
This development compounds the challenges facing the global chocolate industry.
With cocoa prices more than doubling this year following three consecutive years of poor harvests in Ghana and Ivory Coast, chocolate makers worldwide are adjusting prices for consumers. These two countries collectively account for 60% of global cocoa production.
Initial market estimates suggested that Ghana would roll over approximately 250,000 metric tons of cocoa, equivalent to about half of its current crop. However, Ghana’s cocoa regulator, COCOBOD, clarified that while the country is considering rolling over “some volumes,” it is not contemplating quantities as high as 350,000 tons.
Adverse weather conditions, bean disease, and illegal gold mining have ravaged Ghana’s cocoa crop, further exacerbated by increased smuggling of beans to neighboring countries for higher prices.
According to sources familiar with the matter, Ghana had pre-sold approximately 785,000 tons of beans for the current 2023/24 season but is expected to deliver only about 435,000 tons. This shortfall reflects the challenges posed by the cocoa market’s recent volatility.
Ghana typically forward sells about 80% of its cocoa crop, which usually totals between 750,000 to 850,000 tons.
However, last season’s crop fell to around 670,000 tons, and this season’s production is not expected to exceed 500,000 tons, leading to concerns about future yields.
The International Cocoa Organization anticipates a 10.9% decline in global cocoa production this season, forcing processors and chocolate companies to rely heavily on existing cocoa stocks to meet demand.
The ongoing price rally is disrupting established cocoa trading mechanisms, with Ghana struggling to maintain forward sales for next season.
With forward sales volumes and prices under pressure, the country faces challenges in setting minimum prices for farmers, potentially exacerbating issues such as bean smuggling and diversification away from cocoa farming.
