Amid the coronavirus pandemic, Ghana Cocoa Board (COCOBOD) reported a total purchase of 742,725 tonnes for the 2019/2020 cocoa season as at June 4, 2020, new data from the International Cocoa Organization (ICCO) has revealed.

This reflects a decline of 4.3 percentage drop from the volumes bought over the same period of the previous season.

The decline in volumes purchased by COCOBOD comes at a time when the international cocoa market had continued to adopt a backwardation position in the New York market and a contango position in the London market, as at the middle of July, 2020.

However, COCOBOD expects cocoa output of around 900,000 tonnes in the 2020/2021 season, up 5.8 percent from the forecast for 2019/2020. The expected increase is in view of ongoing initiatives to increase cocoa farm productivity which are expected to begin reaping major rewards soon.

In view of this, COCOBOD plans to raise a US$1.3bn syndicated loan to fund cocoa purchases during 2020/21 from a consortium of banks and financial institutions, with the government as guarantor. The loan is being contracted at an annual interest of one-month Libor plus 1.75 percent, a commitment fee of 0.62 percent per year and an upfront flat fee of 1.25 percent.

Ghana’s premium quality cocoa beans are sold on forward markets

Likewise, in Côte d’Ivoire, as at August 3, 2020 cumulative cocoa arrivals, since the 2019/20 season started, were established at 2.043 million tonnes, down by 5.4 percent from the 2.160 million tonnes reached during the same period in the previous season.

Cocoa Demand

According to the ICCO, on the demand side, a bearish stance was seen in the second quarter of 2020 grindings figures. Indeed, the European Cocoa Association (ECA) released data showing a year on year decrease of 8.9 percent to 314,108 tonnes in grindings while the Cocoa Association of Asia (CAA) announced a decline of almost 6 percent to 202,674 tonnes year on year.

In the same vein processing activities weakened in North America during the second quarter of 2020 with the National Confectioners’ Association (NCA) reporting a 10.7 percent reduction to 110,776 tonnes of cocoa beans grinded.