Farmers in Ghana and Cote D’Ivoire are upbeat about the next harvest after heavy rains in recent weeks helped support crop development.
It’s an important time of the year for farmers in the two countries which together account for more than 60% of global cocoa production. One of the two annual cocoa harvests is approaching. The so-called main crop starts in October and runs through March.
Conditions have been favorable for crops and are likely to mostly stay that way, said Drew Lerner, President of World Weather Inc. While rains have subsided for now, the wet season will return next month until the harvest starts, and then it’s “back to the more seasonally dry time again to support the harvest,” he said.
Either way, “it should be an average crop with maybe a slight bias towards better than average,” said Lerner.
“The crop is good and farmers are upbeat about the new season”
Still, there’s a threat that drier weather in August may have a negative effect on crops, according to Giacomo Masato, a meteorologist at Marex Spectron Ltd. While an earlier threat of El Nino has subsided, there’s an outlook for “cooler sea surface temperatures over the Gulf of Guinea” that also results in drier conditions, he said.
The favorable conditions in July and early August helped drive cocoa futures lower, on expectations of ample supply. Citigroup Inc. analysts recently lowered their cocoa-price projection, citing improving weather in Ivory Coast and Ghana.
Cote D’Ivoire and Ghana’s new plan to introduce a premium on the sale of their beans will probably result in increased cocoa planting, boosting supply over time, according to Edward George, an independent cocoa expert.
Cocoa in New York for December delivery dropped as much as 0.6% to $2,232 per ton on Tuesday, the lowest since March 22.
Cote D’Ivoire is projected to produce a record 2.3 million tons of cocoa in the current season that ends in September, according to the average estimate from three traders surveyed by Bloomberg.
For the upcoming season, the Ghana Cocoa Board is targeting a harvest of 950,000 tons, while Volcap’s Sargeant estimates it could reach about 960,000 tons.