"Dry Harmattan Winds Threaten West African Cocoa Crops"

" Dry Harmattan Winds Threaten West African Cocoa Crops \r\nCocoa prices today are climbing for the third consecutive session, with NY cocoa posting a 2-week high and London cocoa posting a 1-month high. \u00a0Crop production concerns in West Africa are underpinning prices as forecaster Maxar Technologies said this year's seasonal Harmattan winds are the driest in six years, worsening crop conditions.\r\n\r\nSome Ivory Coast and Ghana cocoa farmers have reported that cocoa trees are beginning to suffer the effects of the seasonal dry and dusty Harmattan winds, with leaves turning yellow and the cherelles (cocoa pods) withering.\r\n\r\nReduced global cocoa inventories are also supportive of cocoa prices. \u00a0ICE-monitored cocoa inventories held in US ports have been trending lower for the past 1-1\/2 years and fell to a 21-year low last Thursday of 1,292,153 bags.\r\n\r\nCocoa also has support from concern that slowing Ivory Coast cocoa exports will tighten global supplies. \u00a0While government data Monday showed Ivory Coast farmers shipped 1.20 MMT of cocoa to ports so far this marketing year, up more than +26% from last year, the pace has narrowed from the 35% rise seen last month.\r\n\r\nLast Thursday, cocoa prices fell to 1-week lows on concern high prices were causing demand destruction for cocoa. \u00a0Last Thursday, the European Cocoa Association reported that Q4 European cocoa grindings fell -5.3% y\/y to 331,853 MT, the lowest in more than 4 years. \u00a0Also, the Cocoa Association of \u00a0Asia reported that Q4 Asian cocoa grindings fell -0.5% y\/y to 210,111 MT, also the lowest in 4 years. \u00a0In addition, the National Confectioners Association reported that Q4 North American cocoa bean grindings fell -1.2% y\/y to 102,761 MT.\r\n\r\nCocoa also has support after chocolate maker Hershey Co. recently said it sought CFTC approval to buy a large amount of cocoa through the ICE Futures Exchange due to tight global supplies. \u00a0Bloomberg reported that Hershey wants to take a position allowing it to purchase more than 90,000 MT of cocoa on ICE Futures US. \u00a0The purchase size is more than nine times what the exchange currently allows. \u00a0The amount also exceeds a federal position limit of 4,900 contracts, or 49,000 MT, set by the CFTC. \u00a0Global cocoa shortages are so large that it is now cheaper to take delivery of supplies through the New York exchange than buying in the physical market.\r\n\r\nOn December 18, NY Cocoa posted an all-time nearest-futures high, and London Cocoa posted an 8-1\/2 month nearest-futures high on the deterioration of the West African cocoa mid-crop outlook. \u00a0Maxar Technologies warned that dry conditions in West Africa will hurt the early development of the mid-year cocoa crop harvested in April and that the arrival of the seasonal Harmattan winds could worsen the situation.\r\n\r\nIn a bullish factor, the International Cocoa Association (ICCO) on November 22 raised its 2023\/24 global cocoa deficit estimate to -478,000 MT from May's -462,000 MT, the largest deficit in over 60 years. \u00a0ICCO also cut its 2023\/24 cocoa production estimate to 4.380 MMT from May's 4.461 MMT, down -13.1% y\/y. \u00a0ICCO projected a 2023\/24 global cocoa stocks\/grindings ratio of 27.0%, a 46-year low.\r\n\r\nStronger cocoa exports from Nigeria, the world's sixth-largest producer, are also bearish for prices. \u00a0Nigeria's Nov cocoa exports rose +35% y\/y to 38,015 MT.\r\n\r\nOn the negative side, the Ivory Coast regulator Le Conseil Cafe-Cacao on October 18 raised its Ivory Coast 2024\/25 cocoa production estimate to a range of 2.1-2.2 MMT from a June forecast of 2.0 MMT.\r\n\r\nCocoa found support after Ghana's Cocoa Board (Cocobod) on August 20 cut its 2024\/25 Ghana cocoa production estimate to 650,000 MT from a June forecast of 700,000 MT. \u00a0Due to bad weather and crop disease, Ghana's 2023\/24 coca harvest sank to a 23-year low of 425,000 MT. \u00a0Ghana is the world's second-biggest cocoa producer."

"Dry Harmattan Winds Threaten West African Cocoa Crops"

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