Ivory Coast Cocoa Output Risks Lagging Contracted Sales

Mumbi Gitau, Baudelaire Mieu and Yinka Ibukun
Tue, February 6, 2024





(Bloomberg) -- Ivory Coast’s prolonged weather crises risk leading to a cocoa bean shortfall of 70,000 to 100,000 tons compared with contracted main-crop sales, according to people familiar with the matter.

Le Conseil Cafe-Cacao, the country’s regulatory body, has sold about 1.35 million tons in forward contracts for the 2023-24 main-crop that runs through March, the people said.

The CCC cautiously sold the 2023-2024 harvest to take into account the expected drop in production, a spokeswoman for the industry regulator said, declining to comment on the size of shortage. The head of the regulator earlier dismissed buyer concerns over dwindling supplies and declined to give data on beans sold so far.

Ivory Coast’s cocoa harvest is divided into two parts — the first or main-crop plucked between October through March — and a smaller mid-crop that follows.

“We remain confident we will fulfill all the contracts with the main crop,” Yves Kone, who heads the CCC, said by phone. “The harvest hasn’t yet ended. In the worst-case scenario, in the past, we’ve used the mid-crop to cover contracts.”

The CCC typically sells the bulk of a season’s expected crop months in advance to exporters who must buy the volumes they booked once the harvest starts. In surplus years, companies comfortably purchase the contracted volumes, and the regulator can sell the excess beans in the spot market. However, a production shortfall like the one playing out in Ivory Coast, means it’s likely some contracts cannot be met.

The increasing intensity of the seasonal dusty Harmattan winds in the region is sparking worries about damage to the upcoming mid-crop as well as next season’s bigger main-crop harvest. Already, the CCC has halted the 2024-25 forward sales until it has a clear picture on production.

That adds to global concerns over tight supplies that have pushed prices to the highest in four decades. The production shortfall in the top grower this season has already hurt exports, currently lagging the previous season by nearly 40%. Cocoa futures in New York soared past $5,200 a ton on Monday before pulling back slightly.

If the deficit leads to companies rolling over their unfulfilled contracts into the mid-crop it will diminish supplies available in the country. In addition to the lower output, factories in Ivory Coast may also struggle to keep processing because a tax incentive that boosted local grinding ended last year.