Cocoa prices have recently experienced a significant decline by 26%, driven primarily by a surge in output from Nigeria coupled with abundant rainfall.
Nigeria, ranking as the world’s fifth largest cocoa producer, reported a noteworthy 19% year-on-year increase in its March cocoa exports, totaling 22,199 metric tonnes, according to nairametrics.
Following a period of record highs earlier this year, cocoa futures contracts have plummeted by over a fifth in value within the past two days, eventually settling at US$6,500 per tonne.
The decline in cocoa prices coincided with the onset of rainfall in West Africa, alleviating concerns of a substantial reduction in next year’s crop yield.
In mid-April, cocoa prices surged to $11,800 per tonne due to supplier shortages and decreased yields attributed to unfavorable weather conditions, tree diseases, and inadequate investment.
Ghana, Ivory Coast, Nigeria, and Cameroon collectively contribute around 75% of the world’s cocoa production; however, this year’s harvest is anticipated to fall below average.
Given the existing production shortfall relative to demand, recent market dynamics suggest a potential global cocoa shortage by 2023.
The Hydrological Service Agency has issued warnings regarding severe flooding in Nigeria’s primary cocoa-growing regions, which could disrupt planting and mid-crop harvesting activities in the country.
Minister Joseph Utsev of Water Resources and Sanitation highlighted the vulnerability of regions including Ondo, Cross River, Osun, Oyo, Ogun, Taraba, and Delta to flooding.
Concerns surrounding a diminished mid-crop harvest in West Africa, traditionally occurring every two years, have further tightened cocoa supplies. Estimates for Ghana’s mid-crop, commencing in July, have been revised downwards from 150,000 to 25,000 metric tonnes.
