CocoaNetwork (New York) – Today, the International Cocoa Organization released the first quarterly bulletin of the 2022 calendar year.
PRODUCTION, GRINDINGS AND STOCKS
2020/21 ESTIMATES:
In line with the crop year data available to the Secretariat, several revisions have been made in this issue to the 2020/21 balance sheet. Despite the revisions, production estimates for the 2020/21 season currently remain the highest on record. On the supply side, data on production were revised upwards mainly for Nigeria (up by 20,000 tonnes), Ecuador (up by 15,000 tonnes), the Democratic Republic of Congo and Peru (up by 8,000 tonnes each), Colombia and Guinea (up by 5,000 tonnes each) in addition to an aggregated upward revision of 11,000 tonnes for other minor producing countries. On the other hand, production estimates have been lowered mainly for Indonesia (down by 10,000 tonnes) as well as an aggregated downward revision of almost 12,000 tonnes for other minor producing countries. Moving on to the demand side, the main countries accounting for the revisions are Turkey (up by 20,000 tonnes), Canada (up by 14,000), Belgium and the United Kingdom (up by 10,000 tonnes each). Countries with upward revisions less than or equal to 5,000 tonnes, amounting in total to 22,000 tonnes have also been accounted for. Lower grindings have been estimated for a number of countries, summing up to around 28,000 tonnes. Based on these revisions, a production surplus of 215,000 tonnes.
2021/22 FORECASTS:
On the back of production shortfalls combined with an improvement in demand, the cocoa season under review is projected to witness a moderate deficit without considering the existing stocks. Compared to the 2020/21 season, cocoa supply is anticipated to drop by 5% to 4.955 million tonnes. Global cocoa demand is projected to increase and register a jump of almost 3% from 4.959 million tonnes during 2020/21 to 5.086 million tonnes for the season under review.
If realized, this would decrease the total statistical stocks of cocoa beans at the end of the 2021/22 cocoa season from 1.928 million tonnes in the previous season to 1.747 million tonnes, which is equivalent to 34.3% of projected annual grindings for 2021/22.
PRODUCTION:
Global cocoa production is noted for having a chequered record as very often, a period of bumper harvest is followed by a decline in output. This is being replicated for the current season. After posting the highest production level in 2020/21, the Secretariat’s first estimate for the 2021/22 cocoa year is expected to be lower than the past season. The current season had a slow start but as it advances, volumes of arrivals and purchases are anticipated to improve especially in Côte d’Ivoire and Ghana - the two largest producing countries that account for more than 60% of the global production. It is worth noting that the development of the West African 2021/22 main crop during the third quarter of 2021 was negatively impacted due to inadequate rainfall. Though conducive weather conditions for cocoa resumed during October to December 2021, as at the time of writing, a mild Harmattan with severe dryness is being experienced in the main producing countries of West Africa. On a year-on-year basis, the 2021/22 production is envisaged to be lower, although the return of rains will be beneficial for the tail end of the main crop and the mid-crop.
With a forecast of 3.752 million tonnes, Africa is estimated to account for 76% of global production, followed by the Americas with a share of 19% or 939,000 tonnes and Asia and Oceania at 5% or
264,000 tonnes.
AFRICA:
CÔTE D’IVOIRE
In Côte d’Ivoire, production for the 2021/22 season is anticipated to fall compared to the preceding season. However, with a forecast of 2.200 million tonnes, this is still very high by historical levels. Though the crop started late and arrivals for the first three months of the season were down year-on-year, arrivals data are currently above last year’s corresponding period. As of 13 February 2022, arrivals were 1.474 million tonnes, up by 3.7% compared to the corresponding period of the previous crop year. However, concerns have been raised in relation to inadequate rainfall coupled with dry winds which in turn could have a negative impact on the quality and development of the mid-crop.
GHANA
After an impressive output in the preceding season, a lower forecast of 822,000 tonnes is estimated for Ghana. Poor weather is reported to be the major cause for the decline. The irregular rainfall pattern that occurred between June and September 2021 was detrimental to the development of the pods. Low purchase data have been recorded for Ghana and this has been attributed to the late start for the country’s main crop. Although it is anticipated that further along, the weather will turn around for the better to support the mid-crop, Ghana’s total production for the season under review will be lower compared to the historic level recorded for the preceding crop year.
CAMEROON
The introduction of a premium price for quality cocoa is expected to support cocoa bean production in Cameroon, which is forecast at 280,000 tonnes for the 2021/22 season. The quality is reflected in the upward trend in exports from Cameroon.
NIGERIA
In Nigeria, thanks to the transfer of research results and in particular the earlier supply of hybrid cocoa seedlings to farmers, the output from the hybrid cocoa is anticipated to mitigate the losses from unconducive weather conditions as well as old-aged trees. For the 2021/22 season, production is forecast at 280,000 tonnes in the country.
AMERICAS
Cocoa output from the Americas, is projected to increase slightly for the 2021/22 season. Adverse growing conditions have not been observed as much as in Africa. At country level, based on current information available, not much has changed from the outlook for the previous season. In Brazil, although floods were reported in some cocoa producing areas, not many losses were encountered. The forecast production is pegged at 210,000 tonnes. The flat trend observed in the Dominican Republic for the past few years is envisaged to continue in the current season. Thus, production is expected at 80,000 tonnes. Production by the other leading producers in the Americas – namely Ecuador and Peru is projected to be 370,000 tonnes and 150,000 tonnes respectively.
ASIA AND OCEANA
Currently a net importer of cocoa beans, Asia and Oceania did not witness any significant improvements in its cocoa production in recent years. However, with the current trend where major West African producers are increasingly engaging in processing activities, the likelihood of a reduction in the movement of beans from West Africa to South-East Asia cannot be ruled out. Thus, in the long term, the potential for a return to cocoa production remains open in order to feed the vibrant processing sector of South-East Asia. With no particular information from the main actors in the region – namely Indonesia, Papua New Guinea and Malaysia, production in these countries is projected at 180,000 tonnes, 42,000 tonnes and nearly 1,000 tonnes respectively.
GRINDINGS
The easing of lockdowns and control measures for the COVID-19 pandemic has set the stage for a comeback in commodities. Thanks to progress in vaccinations, economies have opened, boosting the demand for most commodities including cocoa. For cocoa demand, the oversupply and ample stocks of cocoa beans in the preceding year made cocoa beans relatively affordable. This may have cushioned manufacturers’ cost of production and consequently led to an increase in confectionery production and sales especially as retailing and restaurants have opened, and demand is on the increase.
Nevertheless, uncertainties remain over the long term. COVID-19 continues to be a concern as over the recent past years, outbreaks of any COVID-19 variant led to restrictions on people and consequently demand. In addition, global inflation could impact household income and consequently purchasing activities. Logistical constraints such as shipping bottlenecks could also affect processing operations. The current rise in sea freights combined in certain instances of inability to adhere to established shipping timetables can create an artificial scarcity of beans and thus may impact grindings in traditional cocoa processing regions.
For the current season, the Secretariat forecasts global grindings of cocoa beans to increase by 2.6% to 5.086 million tonnes. grindings are expected to rise in Europe by 4% to 1.826 million tonnes, Americas by 1.3% to 987,000 tonnes while Asia and Oceania and Africa are anticipated to rise by 2% each to 1.203 million tonnes and 1.070 million tonnes respectively.
Grindings in cocoa importing countries are projected to register significant increases. Data published by the German Confectionery Association reveal that grindings in Germany rose by 8.8% during the October - December 2021 quarter from the corresponding quarter of 2020. For the same time frame, statistics published by the European Cocoa Association (ECA) depicted a 6.3% increase to 365,826 tonnes. The Netherlands and Germany, as leading processors in Europe, are forecast at 628,000 tonnes and 480,000 tonnes respectively. North America’s grindings data published by the National Confectioners Association (NCA) indicated a 1.2% decrease to 116,613 tonnes. With confectionery sales in North America booming back to pre-pandemic levels, the fall in the NCA data may be linked to the reduction in the number of reporting factories. Unlike the period October to December 2020 for which reports were received from seventeen factories, only sixteen factories reported their data for Q4.2021. The Secretariat’s forecasts for the United States, Canada and Mexico for the 2021/22 season are expected at 400,000 tonnes, 110,000 tonnes and 61,000 tonnes respectively.
Major processing companies are undertaking investments such as expansions and acquisitions in cocoa origin countries as the latter are offering enticing incentives for domestic processing. Indeed, with the price rally in sea transportation, origin processing could be a better option for major processors. In Côte d’Ivoire, processing is gauged to increase by almost 2% to 630,000 tonnes while in Ghana, it is envisaged to rise by almost 3% to 330,000 tonnes. As released by the Cocoa Association of Asia (CAA), there was an increase of 6.33% year-on-year in grindings to 231,309 tonnes for the October to December 2021 quarter. For the season under review, Asia and Oceania are expected to augment their grindings activities by 2% to 1.203 million tonnes. Indonesia and Malaysia are expected to maintain their status as the most dynamic cocoa processing countries in Asia for the period under review at 495,000 tonnes and 350,000 tonnes respectively.
Alexis Rubinstein
