The Conseil du Café-Cacao (CCC) has suspended the sale of cocoa bean futures for the 2023/2024 season. The halt has been taken for an indefinite period, "until further notice". The reason for the suspension of trade is "continued uncertainty related to the supply chain".
Yves Brahima Koné, Head of the CCC, explains the situation as being also due to heavy rains which lasted in the country for over one and a half months, leading to extensive flooding, logistical difficulties, and the development of diseases on the plantations.
Côte d'Ivoire is the largest producer of cocoa in the world, accounting for 45% of global cocoa supplies, followed by Ghana and Indonesia.
Mind analysed if the world should prepare for a chocolate deficit and/or a price increase.
What is the cause of the disruptions in the supply of cocoa beans from the largest producer? Prolonged rains became the catalyst for the development of brown rot (or black pod disease) – a fungal disease of cocoa trees. This disease is provoked by prolonged high humidity. Rains in Côte d'Ivoire lasted from 10 May and only ended in the middle of the summer.
"We expect much less cocoa in the first half of the main harvest compared to this season. We hope that production from January to March will allow us to balance our volumes, otherwise it will be a problemme," Koné emphasised. "Brown rot is progressing everywhere due to the rains. We are forming a team for a more objective assessment of the situation. This worries us, and we need to take steps to mitigate the consequences."
How much cocoa does Côte d'Ivoire sell in total? Before the suspension was announced, cocoa sales exceeded 1 million tonnes, or about 50% of the expected harvest of 2.2 million tonnes.
Cocoa beans account for about 40% of all Côte d'Ivoire's export revenues, so the halt in trade is a major blow to the country's economy.
How will the cocoa sales suspension impact buyers? Buyers – both global international traders like Cargill, Olam, and direct confectionery producers – Barry Callebaut, Hershey, and Nestle will feel the effect of the trade suspension in the form of even higher prices.
Meanwhile, cocoa prices are already at record levels.
In addition, the country is aiming to move away from the raw chocolate products model – Côte d'Ivoire plans to increase internal cocoa processing to 50% from the current 35-40%, starting from October, through the addition of several new factories.
The country has signed a contract with the United Arab Emirates to build a new factory in San-Pedro with a grinding capacity of 120,000 tonnes and with China to build two factories each with a production capacity of 50,000 tonnes. The new factories will allow the country to process more than 1 million tonnes of cocoa per year, making it the largest cocoa producer in the world.
Prices are also rising due to the "green agenda" factor. For instance, in the EU, rules came into effect on 1 July prohibiting the import of cocoa beans from areas where forests were being cut down. Bans on child labour are also being strengthened. Producers must rebuild all production processes by the end of 2024 – compliance with the new rules will result in additional costs, including the implementation of monitoring systems.
According to Grand View Research, in 2021 the total global chocolate market was $113 billion, with Europe's share in the total value creation chain being almost half.