Cocoa prices have surged to a 13-year high due to heavy rainfall across West Africa, which has accelerated the spread of a rot-causing disease, posing a threat to cocoa output in major producing countries.
Farmers in Ivory Coast, Ghana, and Nigeria have reported the presence of blackpod disease, causing cocoa pods to blacken and rot. This disease can have a significant impact on the quality and quantity of cocoa beans, potentially disrupting the supply chain. According to Fuad Mohammed Abubakar, the head of Ghana Cocoa Marketing Co., the disease can be devastating for cocoa production.
Farmers in Ivory Coast are concerned about the mid-crop’s output and quality, expecting it to be disappointing compared to the previous year. This raises worries that the smaller harvest may not be sufficient to offset any shortfall from the main crop.
Cocoa is harvested twice a year, with the main crop harvested mostly from October to March and the mid-crop from May to August.
London cocoa futures have experienced a remarkable surge of over 20% this year. On Monday, the most active futures reached £2,544 per ton, marking the highest level since mid-2010.
In Nigeria, farmer Sola Ogunsola reported significant damage to cocoa farms in coastal areas, resulting in the loss of developing pods. Additionally, heavy rainfall has made roads impassable, hindering the application of chemical treatments in plantations and the transportation of cocoa to ports.
Ivory Coast farmers have sent 2.24 million tons of cocoa to ports during the current season, slightly below the estimated 2.29 million tons from the previous year.
Furthermore, the return of El Niño conditions is adding support to cocoa prices, as the weather phenomenon typically brings hot and dry conditions to West Africa, increasing the risk of a potential 10% drop in output, according to Bloomberg Intelligence estimates.