The most crucial cocoa stories this week

Dry weather in West Africa impacts cocoa prices, Fairtrade calls on EC to protect farmers over EUDR, two conferences in September keep the cocoa dialogue open

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Market roundup

ING commodity desk reports cocoa prices have been up around 10% in the last week amid concern that dry weather in West Africa could curb the region's cocoa production.  

Forecaster Maxar Technologies told barchart.com that top cocoa-producing countries Cote d’Ivoire and Ghana have seen a 'significant decrease in shower activity' over the past month, leading to below-normal soil moisture and limited crop growth.

Still, some market analysts estimate that mixed weather conditions in the upcoming months could lead to a recovery in West Africa’s cocoa production and flip the market into a surplus in the ongoing season.

A slide in the dollar earlier this week to a one-week low sparked some short covering in cocoa futures, according to Nasdaq. Tighter US cocoa supplies are also supporting prices. ICE-monitored cocoa inventories held in US ports fell to a four 1/2-year low on Tuesday (13) of 2,771,681 bags.

In London, a stronger pound undercut cocoa prices in terms of sterling, limiting gains, while analysts predict cocoa on the international futures market is likely to remain above $5,000/tonne for at least the next 16 months.

Government data from Cote d’Ivoire at the beginning of this week showed that the country’s farmers shipped 1.67 MMT of cocoa to ports from 1 October to 11 August, down by 28% from the same time last year.  

According to barchart.com, another ‘bearish’ factor for cocoa prices was the projection from Cocobod, Ghana's cocoa regulator, earlier this year. It predicts that cocoa production for 2024-25 will rebound to 700,000 MT from 425,000 MT in 2023-24 as improved weather conditions boost cocoa yields. Ghana's 2024-25 main cocoa harvest begins in October.

Cameroon's National Cocoa and Coffee Board has reported that in 2023-24 (Aug-July), Cameroon's cocoa production rose +1.2% year over year to 266,725. Cameroon is the world's fifth-largest cocoa producer.

Also, Nigeria, the world's sixth-largest cocoa producer, reported that Nigeria's June cocoa exports rose +18% y/y to 14.465 MT, according to barchart.com.

Fairtrade urges the European Commission to give more farmer support over EUDR

Fairtrade International has urged the  European Commission (EC) to offer more financial support and clarify the technical terms needed for cocoa and coffee producers to meet the 30 December 2024 European Union Deforestation (EUDR) deadline. 

While the organisation reiterates it strongly believes in the EUDR objectives to create sustainable supply chains by preventing the sale and import of forest-damaging products - in a statement to the media, it said it  is “very concerned that producer organisations will be cut off from trade with the EU market or pushed out of supply chains by larger producers not because they farm on deforested land, but because they face challenges in collecting, managing, and submitting the necessary data.”

The 2023 regulation applies to companies placing relevant commodities or products on the EU market or exporting those from it. They must demonstrate that their products are deforestation-free as of the 2020 cut-off date and are not linked to forest degradation or illegal harvesting and trade.

Fairtrade International said this is why it calls on the EC to address the regulation’s shortcomings and help the millions of small-scale farmers at risk. 

It recommends the EC needs to act immediately on:

• Provide an assessment of the EUDR’s expected impact on the most vulnerable stakeholders in the global supply chain - small-scale farmers - and their ability to comply with the regulation, the administrative burden, and the compliance costs.
• Develop a coherent EU framework strategy for supply-side partnerships with producer countries that create a space for multi-stakeholder dialogue and are linked to efficient economic and trade incentives.
• Share the promised guidance document that helps clarify the application of the law, including defining key terms, explaining the rules on the traceability requirements and data governance across supply chains, and specifying the criteria used to verify compliance. Plus, update the EUDR’s Frequently Asked Questions, which have not been updated since December 2023. The more information producers have, the easier it is for them to adapt and work to meet the new requirements.
• Provide market incentives and funding to assist small-scale farmers in complying with EUDR requirements. Farmers should not have to bear the compliance costs linked to EU laws.

Fairtrade said it had updated its Cocoa Standard (2022) and Coffee Standard (2024), which require Fairtrade-certified producers to strengthen their deforestation prevention, monitoring, and mitigation. 

“The updated Standards align with the EUDR requirements, including that farms above four hectares in size or in high-risk areas must use polygon mapping, while smaller farms and farms in low-risk areas can use single geolocation points.”

Fairtrade has partnered with tech firm Satelligence to help cooperatives collect data on their members’ farms and deforestation risks. 

The producer organisations provide geolocation data for each of their members’ farm plots. Satelligence’s platform verifies the data, detects any deforestation activity within members’ boundaries, and whether or not farms are located in protected areas. It also flags deforestation near the farm, which is essential information contributing to cooperatives’ risk assessments. Finally, the system generates reports that cooperatives can use themselves and provide to their customers or potential customers.

Cocoa conference roundup

The conference season continues next month with two important events that coincidentally occur on the same day, albeit on opposite sides of the world.

First to Europe, the World Confectionery Conference (WCC) will take place on 12 September in Brussels.

Organised by the trade magazine Confectionery Production, the WCC is becoming an established fixture in the industry calendar. One of the highlights is its awards ceremony, now in its third year, which celebrates innovations across finished products, ingredients, sustainability, and emerging enterprises.

The one-day event also features influential keynote speakers, including Francesco Tramontin, Ferrero Vice President, EU Institutional Relations and Group Public Policy; Joke Aerts, Tony's Chocolonely Open Chain Lead; Can Buharali, Mondelez International/Caobisco Senior Director Global Public Affairs; Honorata Jarocka, Mintel Principal Analyst; James Ede, Cargill Sustainability Lead; and Ben Nice, FMCG Gurus, Business Development Manager.

The WCC aims to 'unite the wider confectionery industries in a boutique setting, maximising communication channels between key decision-makers and providing access to the latest efficient and innovative technology, systems, and products'.

Confectionery Production will also celebrate 90 years of publishing with a special reception to close the conference.

Details:  Brussels, Belgium, NHow Brussels Bloom Rue Royale 250, 1210 Bruxelles, Belgium 12 September 2024 Register and find out more here.

The Cocoa Association of Asia Conference will be held from 12 September to 13 at the Raffles City Convention Center in Singapore.

Under the banner: A Confluence For Positive Change, the CAA Conference is Asia’s leading cocoa and chocolate conference for senior business leaders, key stakeholders, decision-makers, and thought leaders. 

With over 90% of the cocoa trade and manufacturing in Asia represented among its members, it is the industry's leading regional voice. Next month's gathering aims to bring together cocoa enthusiasts, professionals, and businesses to foster a vibrant community that celebrates cocoa's art, science, and culture.

For more details, visit cocoasia.org

ICCO debrief on World Cocoa Conference

The International Cocoa Organization (ICCO) published a report on its findings following the 5th edition of the World Cocoa Conference, which was held in Brussels from 21 to 24 April 2024.

Described as a ‘landmark event,’ the conference was attended by over 1,000 stakeholders from across the global cocoa industry, including farmers, cooperatives, exporters, traders, manufacturers, brands, retailers, financial institutions, and government representatives from 75 countries.

The report provides a detailed account of the insightful discussions, key takeaways, and actionable recommendations from the conference. The ICCO says it is a valuable resource for all stakeholders committed to fostering a more equitable and sustainable cocoa sector.

The Brussels Declaration

The conference culminated in adopting the Brussels Declaration, encapsulating the event's outcomes and commitments. The declaration stressed the need for regulatory compliance, shared responsibilities between consumer and producer nations, and collective efforts to strengthen sustainable supply chains.

The report can be accessed on ICCO website.