Cocoa futures surged by a notable 37% in the international markets on Monday, September 9, 2024, rising from 7,163 points to a robust close at 9,839 points.
This strong bullish performance comes as Ghana pushes for increased spot sales of cocoa, expecting to raise less than half of its $1.5 billion target to fund the next crop season after failing to secure the necessary funds from foreign lenders.
The bullish run in cocoa futures is likely driven by investors anticipating that higher exports this season could lead to a supply shortage in the next, prompting a rush to buy and secure stock.
Monday’s recent upward rally marks a recovery from a sharp dip that saw cocoa futures hit a low of 7,348 points in May.
Ghana’s cocoa sector regulator, COCOBOD, reported that the country is unlikely to meet its target of 820,000 tons for this season.
The shortfall is blamed on adverse weather conditions, including strong seasonal winds and insufficient rainfall, as well as issues like smuggling, damage from illegal gold mining, and the spread of swollen shoot disease.
“The cause of the decline is not something that can be quickly resolved through human intervention,” a source from COCOBOD told Reuters, noting that production is now expected to reach just 500,000 tons.
In response, Ghana has increased the volume of cocoa beans designated for export, following challenges in securing loans from foreign lenders like the Industrial and Commercial Bank of China and Mitsubishi UFJ Financial Group Inc.
