Cocoa prices have declined 22 percent on the back of a large supply of the commodity in major growing states amid lack of liquidity.
After more than doubling this year, cocoa prices have dropped from an average of N13 million in mid-April to an average of N10.2 million on Thursday, BusinessDay’s market analysis shows.
In the international market, the beans dropped from a record high of $11,722 per ton in mid-April to $7,817 per ton on Thursday, indicating a 33.3 percent decrease in prices, according to data from the International Cocoa Organisation (ICCO).
Oba Dokun Thompson, the Oloni Eti-Oni, chairman of Eti-Oni Development Group and producer of Gureje IV chocolate bars said that the decline in cocoa prices is due to sufficient output that is as a result of a lack of liquidity in the cocoa market.
“Boost in output is contributing to the decline, with more farmers now in the farm due to the price rally earlier in the year, more cocoa is available in the market now and this is influencing the price decline we are seeing,” he said.
He noted that Nigerian farmers will not be affected by the decline owing to the weaker naira, noting that the latest cocoa price outweighs the value accrued in 2023.
“Farmers will not be adversely affected as prices are still high compared to what they gained last year.”
Currently, a metric ton of cocoa sells for N11.5 million in warehouses at Ladipo, Lagos.
Mufutau Abolarinwa, national president of the Cocoa Association of Nigeria (CAN), said due to a lack of liquidation in the cocoa market output has increased.
“Long liquidation by speculators has left the market open, together with rainfall in countries like Ghana, Cote d’Ivoire and Nigeria, these have caused the market prices to experience a downward trend,” Abolarinwa said.
He noted that the price decline is also influenced by the mid-crop season usually characterised by heavy rainfall, which started in April and will continue until September.
He emphasised that late rainfall in major suppliers of the crop affected its record-high prices.
Adeola Adegoke, national president of the Cocoa Farmers Association of Nigeria, said the country will maintain its production output compared to 2023 despite the recent boost in supply across markets for the ongoing mid crop season.
He noted that the surge in prices was not sustainable and was expected to start declining.
Adegoke noted that climate change is impacting the output of West African top suppliers of the crop like Nigeria and Cote’d’Ivoire, among others.
He added that Cote’d’Ivoire in early April had struggled with scorching sun and delayed rainfall that hindered the start of the April-June mid-crop season.
Nigeria is the third-largest producer of cocoa in Africa, after Ghana and Cote’d’Ivoire, and is the fourth leading grower in the global cocoa industry.
