GLOBAL cocoa prices have recorded the highest trading level in nearly 30 years, officials said over the weekend. The surging prices have been boosted by a shortage caused by poor harvests in Ivory Coast, the world’s leading producer that grows 43% of the global beans.
Cocoa prices last week soared to multi-month peaks, bucking the weak sentiment felt by many other commodities like coffee and flowers.
In Uganda, the farm gate prices soared to sh5,800 per kilogramme of organic cocoa, up from sh3,500 previously.
Prices for conventional cocoa also went up to sh4,780 per kilogramme, up from sh2,500. Cocoa grindings for the December delivery on the international markets increased by 11%, fetching £2,133 per tonne.
Cocoa started the 2009/10 season, trading at £2147 per tonne.
Muwanga Musisi, the Uganda Cocoa Development Organisation executive director, said cocoa fundamentals were supported by the growing demand that has lead to tightness in supply.
“Consumption is expected to continue to outstrip supply up to 2014,” Musisi warned.
Uganda earned an estimated $35m from 15,000 tonnes in the last cocoa year that ended on September 30.
The sector is expected to bring in $40m from 17,000 tonnes at the end of the 2009/10 season. Experts have warned that the market will be under-supplied by at least 38,000 tonnes in the 2009/10 season, which began on October 1.
“Cocoa prices mainly respond to cocoa supply and demand factors. International prices tend to follow a long-term pattern linked to the cocoa cycle (growing season).
“During cocoa boom periods, there is a supply surplus that will result in falling and then stagnating prices,” Musisi explained.
Consequently, low prices due to overproduction generally have a negative impact on harvesting, encouraging farmers to switch to other crops, a factor which again permits world prices to rise.
The cocoa cycle is thus characterised by boom and bust effects.
In the last season, 2008/09, Ivory Coast’s bean production went down by 15% compared to the previous season.
The deficit was due to diseases that hit the West African country and the wet weather.
