Historic price of cocoa encourages producers

data

, 5,379 metric tons is the price cocoa reached in 1977, the highest price recorded by Bloomberg as of Thursday.

, This Tuesday, cocoa reached 5,652 per metric ton on the New York Stock Exchange, which represents an increase of 69 dollars.

Cocoa has reached historic prices International market he has restored hope honduran cocoa farmersAfter the country’s production is projected to decline by more than 35% during 2023. And in the past week, grains have surpassed the $5,379 per metric ton reached in 1977, which was the maximum value of contracts recorded on the New York Stock Exchange. 65 years, according to data compiled by Bloomberg.

On Thursday, the price crossed $6,000 during the day and was set at $5,600 per metric ton at the end of the day. This was driven by supply deficits caused by extreme weather events such as prolonged drought, among other factors. And floods have affected Côte d’Ivoire and Ghana, the main cocoa producers worldwide.

in this regard, International Cocoa Organization (ICO, for its acronym in English), notes that since January 2023, gross cocoa exports from Ivory Coast were lower than the same period in 2022.

This is because excess water released by the rains led to the spread of diseases such as black pod and swollen shoot virus, affecting crops and raising concerns about supply shortages.

export

According to the report of International Cocoa OrganizationFrom October 1, 2023 to January 14, 2024, Ivory Coast cocoa exports totaled 914,000 tonnes, representing a 36% decrease compared to the same period last season.

This scenario also includes the recent increase in freight prices in the Red Sea region due to geopolitical tensions, which will impact world trade, therefore ico The growth trend is expected to continue in the remainder of the year.

Paul Davis, who runs one of the most important marketing companies for soft drinks (raw products), thinks the same.

The key to cocoa’s rise

1. From January 2023, exports of cocoa beans from Ivory Coast and Ghana, the two main producers worldwide, were down compared to the same period last year, due to prolonged drought, floods and the spread of diseases in producing areas Is.

2. Another factor that has influenced the increase in the price of cocoa in the international market is the high cost of sea freight transportation through the Red Sea, this is due to geopolitical tensions in the Middle East, which is why experts and even ​That the Cocoa International Organization itself. It is expected that the price of this product will continue to increase.

3. Experts predict cocoa purchases from Ivory Coast and Ghana will decline when new European rules come into effect, which ban the import and sale of products coming from areas that are deforested and that use child labor. There are problems that organizations are fighting against. Manufacturers from the said countries.

The price increase will last between 18 months to three years, Davis said when consulted by Bloomberg while attending Chocolate Week in Amsterdam.

“We find ourselves in a very fair sense of balance. “There are no soldiers coming to our rescue,” Davis told the financial advisory firm.

Opportunity

For Engineer Anibal Ayala, Executive Director of F.National Association of Cocoa Growers of Honduras (Fenaprocacaho), this is a unique opportunity for Honduran producers.

Ayala indicated that climate change has caused losses not only in the Honduras cocoa sector, but also in countries such as Ivory Coast, Ghana, Ecuador and Nicaragua.

The manager reminded that from June 2023 ico warned that a large portion of the world’s cocoa production would be affected by extreme weather events and, in addition, the price of this product would skyrocket due to the decline in the inventories of large cocoa processing companies such as Nestlé.

At the same time, he revealed that this upward trend has restored hope and encouraged Honduran producers, as a good number of them are already benefiting from the prices.

In this case, he said some cooperatives that contract with processors in Europe are selling cocoa for more than $6,000 per metric ton, because they pay them market price and a bonus for their organic and fair trade certification. .

He said demand for regular cocoa has also increased in recent months, and middlemen in Mexico and Guatemala are paying L42 per pound, equivalent to about $3,700 per metric ton, “a price never seen before.” “

It is fine, aromatic cocoa, he said, which typically does not meet export standards because the pods were damaged by squirrels or birds.

This cocoa, which does not receive post-harvest processing, is usually sold to buyers in Guatemala and El Salvador at a price of L25 per pound, but losses have caused the price to rise 40% compared to 2023.

optimism

Testament to producers’ optimism is the Sosa family, which grows cocoa in the area merendon for 15 years, where it has established an agroforestry system.

During a tour of the Brisas de la Quebrada farm, María Sosa, one of the country’s best cocoa grafters, said that the association’s producers apache They are selling their product at market price and there is a huge demand for regular cocoa.

Just a day before the trip, Maria received several calls from buyers in Guatemala, offering up to L45 per pound of regular cocoa.

Despite her fatigue, Maria’s face looked happy at the end of the job, as her family’s hard work will be well rewarded when they sell the cocoa harvested on their farm this week.

The woman sees optimism in rising prices and encourages other producers to grow cocoa, although she knows the sector still faces challenges such as climate change and production costs.

Aníbal Ayala, director of Fenaprocacaho, visits the Brisas de la Quebrada farm.

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