The fortunes of Ghana's precarious external sector accounts are hanging in a balance as the country looks up to price and production rallies in its two traditional exports -- gold and cocoa -- to improve its foreign currency revenues and shore up the flagging value of the cedi against the international trading currencies.

Last year Ghana lost some $1.3 billion in forgone export revenues due to the slump in both gold and cocoa prices on international markets and production shortfalls.

This was largely responsible for setting off a steep depreciation of the cedi which has continued into 2014 and indeed worsened as export revenue shortfalls from the export of both commodities have created a crisis of confidence in the cedi and resultant speculative purchases of foreign exchange which is now regarded as a hedge against the cedi’s falling value.

Consequently the cedi has depreciated by some 25% during the first four months of 2014 alone on the back of nearly 20% in 2013. Almost mid-way into the year, there is little succour.

On the upside both gold and cocoa prices are currently higher than what they were at the beginning of this year. By mid-May, gold was trading at $1,304 per ounce, up from the $1,200 it was trading at by the beginning of the year.

Similarly, cocoa was trading at $2,917 per tonne, up from a little over $ 2,800 at the start of the year. However both commodities are currently trading at well below the peaks they have recorded so far this year.

Gold achieved a peak price for 2014 so far of US$1,380 in mid-March, about the same time as cocoa’s price peaked at a little over $3,000. This shows that there is not yet a sustained price rally in either commodity and it is still unclear whether the respective prices of each commodity are headed upwards or downwards and for how long.

With complete uncertainty as to the prices of Ghana’s two traditional export commodities going forward into the second half of the year—which are completely out of the country’s control, attention is necessarily focusing on production levels, the other key factor which will determine just how much the nation will earn from them in 2014.

The production outlook for gold the country’s biggest export earner - despite the sharp slump in price and a marginal one in production last year it still generated foreign exchange revenues of over $4billion - is not a good one according to the Minerals Commission which predicts that Ghana will lose 500,000 ounces of gold this year as a result of the decline in the gold price which has forced some mining companies to suspend their operations.

Gold production for 2014 is now forecast at 3.1 million ounces, down from an initial target of 3.6 million, according to Daniel Krampah, an assistant manager at the Minerals Commission.

“We will definitely record lower volumes this year” he declared recently, explaining that some companies have placed their mines under care and maintenance. Based on an average price of US$1,300 Ghana could lose about $650 million in revenue due to the 500,000 shortfall.

The size of the production decline is illustrated by the fact that Ghana produced a record 4.3 million ounces in 2012, up from 3.6 million ounces in the previous year after prices reached a record high in September 2011. The nation produced 107.9 metric tonnes of gold in 2013 making it die eighth biggest producer in the world, according to data from Thomson Reuters.

The production outlook for cocoa is much more promising, but the influence of what was once Ghana’s most important export commodity has dwindled and it is now only the fourth biggest export earner, behind gold, oil and non-traditional exports in that order. Nevertheless it is still of vital importance both as an export commodity which generates between $2-3 million a year and as a source of livelihood for some 800,000 farmers and their households.

This year’s production levels are expected to be higher than last year’s but will still fall short of the record one million tonnes achieved in the 2011/12 crop season.

Cocoa purchases declared to Ghana Cocoa Board [Cocobod], the industry regulator and facilitator reached j 750,122 tonnes by May % since the start of the main crop season on October 181ast year. This is up 17.45%] on the previous year, according to Cocobod data.

The purchases, which covered 28 weeks of the 33 week main crop season, were up from 638,654 tonnes declared in the same period of last year. There are indications that the situation could get better still; it is instructive that total purchases for the 28th week rose to 17,170 tonnes from an average of 10,000 tonnes in the previous three weeks.

Ghana is hoping to buy around 850,000 tonnes of cocoa for export during its October to May main crop harvest. The country sells its cocoa on the futures market.