Cocoa price is on the rise signaling a positive year for farmers. On 18 Jan the price of cocoa stood at $1687.33. The bullish stance on prices, according to the international Cocoa Organisation (ICCO) was observed during the first month of the year. Also, analysts said the price of cocoa increased by more than 50 per cent from January to May last year. The main driver of the surge was high demand at relatively low prices.
Analysts said cocoa beans were able to grow well thanks to favorable weather conditions.
According to analysis provided by the Financial Times, cocoa prices last year hit 19-month high on strong European demand. Cocoa continued its ascent, rallying as much as 5.6 per cent to a 19-month high after strong European demand figures spurred buying. The key ingredient for chocolate has been rising on the back of excess rains in the Ivory Coast, the world’s largest producer. However, first quarter figures from the European Cocoa Association showed a 5.5 per cent year-on-year increase in cocoa “grindings” or the amount of beans being processed. This was due to high cocoa processing margins, which rose to a ten-year high, according to analysts at Commerzbank.
Forecasts of higher demand in Asia also supported prices, which were trading at $2,781 a tonne after hitting $2,856, the highest since September 2016.
Global cocoa prices, which forced farmers to abandon their plantations in 2016, are picking up gradually.
In 2016, the price of cocoa fell from $3,500 to $1,400 per tonne due to a glut in the market caused by excess production of 400,000 tonnes. Since then, cocoa farmers have not been finding easy to make ends meet.
But, their story is changing as the two-year meltdown in the global cocoa market seems to be coming to an end in prices.
Faseru said with rise in cocoa price the wild ride of the past two years was over and farmers were poised to head back to the farms.
The International Cocoa and Coffee Organisation reported in 2015 there was a boom with growing demand, particularly in the new markets of China and India. This pushed farmers to produce a surplus of 400,000 tonnes of cocoa against the four million tonnes yearly supply. In 2016 and 2017, there was another surplus of about 400,000 tonnes.
The massive oversupply, which followed led to global glut, he said, was detrimental to cocoa production with high price fluctuation.
With the price gradually picking, he advised that production should not be dropped and the quality of the crop should be controlled by halting early harvests.
Source: The Nation