Cocoa prices are up as Chocolate makers increased their buying pressure on the soft commodity on the basis that demand would pick up especially during festivities like Christmas.
New York-traded Cocoa on ICE closed at $2,333 per tonne. However, it’s important to note that the soft commodity lost over 8% in value in October alone, recording its biggest monthly drop for U.S. cocoa futures since March, when the market dropped 18.5% at the height of worldwide lockdowns over the COVID-19.
That said, Cocoa traders are wary of the recent lockdown modes prevalent in key markets that include Germany and France, and with the world’s largest economy, the United States recording 9 million COVID-19 cases and more than 225,000 deaths, demand for chocolates are expected to soften, as social mobility is curbed.
Nigeria plays a leading role in the cocoa industry, covering a 6.5% share of the global production of cocoa.
Africa’s largest economy, Nigeria is also the fourth largest exporter of cocoa beans globally. It is behind Côte d’Ivoire, Ghana, and Indonesia, according to the National Export Promotion Council.
Cocoa exports in Nigeria are projected to grow annually by 4% in the coming years.
These export earnings from cocoa, if invested properly, could further help Nigeria reduce its reliance on crude oil, which makes up a large chunk of its export earnings (about 90% Est), and minimize the impact of oil price swings on its economy.
Price swings were prevalent in last week’s trading session at the Cocoa market, on fears that the ongoing political climate in Ivory Coast, the world’s largest producer of cocoa, might disrupt the flow of supplies – on the bias that the recent election won by Alassane Ouattara, the incumbent leader might trigger more uncertainty as the opposition parties staged a walkout.