Cocoa prices are soaring as Ghana's Cocoa Board (Cocobod) expects the 2024 harvest to be half of their initial forecast.
Inputs that matter: Ghana, part of the Ivory Coast, is the largest producer of cocoa in the world.
- Cocoa prices have more than doubled (+143%) since the beginning of the year.
- North American cocoa grindings fell -3.0%.
- The Cocoa Association of Asia reported that grindings fell -8.5%.
- The European Cocoa Association reported that European grindings fell -2.5%.
The opportunity: Cocoa prices have more than tripled over the last year as disease and adverse weather pushed the global market to a third successive deficit.
- "There were several proposals on the table and as a last resort the president wanted the highest possible price for the producers so he decided 1,500 CFA per kg instead of 1,200 CFA, which had been validated previously," the director of a European export company told Reuters.
Zoom in: Blue Line Futures Chief Market Strategist Phillip Streible explains that cocoa price increases are "a combination of things that won't get resolved anytime soon."
- According to Bloomberg, the disappointing harvests from the Ivory Coast have attracted new investment to ramp up cocoa production in Brazil, the previous world leader.
Between the lines: Inflation in Ghana has skyrocketed since 2022, as the Ghana cedi fell to 35.7% against the U.S. dollar (USD).
- Ghana stands 9th among 26 other countries in terms of adopting cryptocurrency.
- Cryptocurrencies are the alternative financial system for countries that are not part of the BRICS or G7 banking systems.
- Ghana's upstart competitor, Brazil, is a member of BRICS with full access to the organization's banking system.
Follow the money: The International Cocoa Organization (ICCO) is an intergovernmental organization comprising cocoa-producing and cocoa-consuming countries.
- The London-based ICCO was created in 1973 after the first United Nations International Cocoa Conference, which created an international agreement for the commodity trade.
- The current agreement has been in effect since 2012.
- As Brazil increases production with the support of other BRICS nations, a new ICCO agreement may be reached soon.
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Read More
- https://fred.stlouisfed.org/series/PCOCOUSDM
- https://fred.stlouisfed.org/series/PCU3113513113517
- https://finance.yahoo.com/quote/NSRGY/
- https://www.barchart.com/story/news/25183132/cocoa-prices-skyrocket-to-a-new-record-high-as-supply-woes-persist
- https://www.iflr.com/article/2aox3llmc6qplgcvooao0/sponsored/the-rise-and-risks-of-the-cryptocurrency-market-in-ghana
- https://www.reuters.com/world/africa/ivory-coast-raise-cocoa-farmgate-price-by-50-2024-03-31/
- https://finance.yahoo.com/video/why-commodity-outperformed-nvidia-153926077.html
- https://banananomics.co/brics_dollar_or_bitcoin
- https://www.bloomberg.com/news/articles/2023-11-24/cocoa-farming-lures-new-money-as-brazil-poised-to-revive-exports?embedded-checkout=true