Brighter Prospects For Cocoa In 2014

Cocoa prices could pick up in 2014 after a disappointing show in most part of last year. Prices of the crop were bearish in the first part of last year until some structured deficits, occasioned by shortfalls in supply, caused prices to recover, albeit slowly. Experts, however, estimate that the continuous shortfall of cocoa supply against demand in the coming year, amid a heightened demand for chocolate, which is a major derivative of cocoa, risks pushing prices of the crop upward. A recent analysis by AGRIMONEY, a commodity tracking news wire, said prices of soft commodities, such as cocoa, could rise to a three-year high in 2014, following some estimated shortfalls within the period. The report quoted Commerzbank, which occasionally releases reports on the price outlook of some key commodities. Another report by BLOOMBERG NEWS survey said cocoa prices could rally to US$3,200 per tonne by the end of 2014, compared to the current price range of about US$2,790 per tonne. An improvement in the global prices of cocoa, a major foreign exchange earner for the country, in 2014 would mean more revenues for the country. It would as well help cushion the government's finances and support the hundreds of thousands of people engaged in the value chain of the cocoa sub-sector. Already, Ghana COCOBOD, which regulates the cocoa industry, is recovering from some financial bruises it suffered in 2013, after an unexpected slump in prices of the crop. The board declined to state the quantum of the loss it suffered, but admitted that the slump affected its revenue estimates and that of government at large. Shortages The Head of Statistics at the International Cocoa Organisation (ICCO), Mr Laurent Pipitone, said in a BLOOMBERG report that cocoa use would outstrip supply by some 700,000 metric tonnes from October 2013 through to 2014. That deficit, the report said, would persist until 2018, making it the longest shortfall of cocoa supply since the ICCO started compiling data on prices of the crop. Demand for chocolate is currently on the rise in traditional markets such as the United Kingdom, Europe and Asia. The same applies to China, which is fast becoming a major consumer of the product. These factors, together with some production challenges in key areas such as Ghana and Côte d'Ivoire, mean that most chocolate producing factories will be unable to meet their consumption targets and that could push prices of the crop up. Challenge for Ghana Ghana's cocoa output slipped from the record one million metric tonnes in the 2011/2012 season to about 850,000 tonnes in the subsequent season. The board is now targeting 830,000 for the ongoing season although its Public Affairs Manager, Mr Noah Amenyah, said the figure could be revised upward. However, this possible upward revision comes in the midst of rising challenges facing the cocoa industry in the country. In addition to declining rainfall, which is more natural than man-made, competition for land by cocoa, rubber, minerals and lumber is also pushing farmers of the crop to the brink. COCOBOD recently revealed that almost all cocoa farms in the country were licensed to lumber companies, meaning that such concession owners could oust the farmers out to make way for logging plantations. This adds to the country's major problem of ageing trees, which the board said constituted a substantial part of the cocoa tree population. Its Public Affairs Manager, however, added that the cocoa rehabilitation scheme, which started some year back, together some initiatives, would help push output up to help ensure that the country participates in any price party that will avail itself in 2014.