Ghana cocoa output to rebound from 20% slump, says ICCO

(Agrimoney) – The International Cocoa Organization flagged the potential for a sharp rebound in cocoa output next season in Ghana, the second-ranked producing country, even as it restated expectations for a slump of more than 20% this season.

The ICCO said that while Ghana’s cocoa output this season will fall to “almost” 696,000 tonnes, the main crop in 2015-16 “is expected to rebound”.

The organisation cited move by Ghana’s cocoa regulator, Cocobod, to revive the country’s output, which topped 1m tonnes in 2011.

Cocobod has “intensified its strategy to sustain and significantly increase cocoa production in the country through a variety of initiatives”, the ICCO said.

It highlighted a programme for distributing free fertilizer and cocoa seedlings, “mass spraying of cocoa farms, and the introduction of a younger generation of farmers in cocoa farming associations”.

‘Margins under increasing pressure’

The comments came as the organisation lowered its estimate for the world cocoa production deficit in 2014-15, on an October-to-September basis, by 23m tonnes to 15m tonnes.

The estimate for world cocoa output was cut by 10m tonnes to 4.16m tonnes, reflecting weaker estimates for harvests in Nigeria, where crops were hurt by infections and poor weather, and Indonesia, which “continues to battle with diseases and ageing trees”.

However, the forecast for consumption was cut by 33m tonnes, to 4,13m tonnes, on weaker expectations for grindings in the Americas and Asia.

“Cocoa processing margins have come under increasing pressure… as high cocoa bean prices, large stocks of cocoa powder, very low processing margins and moderate growth of demand for chocolate continues to weigh on the activity,” the ICCO said.

Malaysian grindings were pegged at 200,000 tonnes, a downgrade of 23,000 tonnes from the previous estimate, and a drop of 23% year on year.

Ivory Coast upgrades

However, the downgrades disguised higher estimates for both output and grindings in Ivory Coast, the top producing country.

The estimate for processing volumes was lifted by 15,000 tonnes this season to 560,000 tonnes, a rise of 41,000 tonnes year on year, reflecting “significant investment in processing capacity”.

For production, the ICCO nudged higher its estimate by 10,000 tonnes to 1.75m tonnes.

“The situation has differed among cocoa growing regions, with some reported to have had their production buoyed by favourable weather, while in others, irregular rainfall has raised concerns about the output and quality of the mid-crop.”

Nonetheless, the ICCO highlighted the potential for a delayed release by farmers of crop onto the market, in expectation of higher prices which the country’s cocoa regulator considering paying next year – up 150 CFA francs at 1,000 CFA francs ($1.67) per kilogramme of beans.

“Should higher farm gate prices for the next season in Côte d’Ivoire be implemented, the likelihood of some of the 2014-15 mid-crop harvest being withheld from the market in order to benefit from the new prices for the upcoming main crop cannot be ruled out.”