Cocoa futures have surged by over 16% month-to-date in November, making it the best-performing commodity with a market volume of 6,800 units traded so far.
The surge comes as cocoa output dropped by over 14% year-over-year, with heavy rains in Ivory Coast and strong winds in Ghana, the top two producers, disrupting the harvest and tightening global supply.
Consequently, cocoa futures, which track global cocoa prices, have risen consistently throughout November, closing four consecutive weeks above their opening price and reflecting the increase in global market prices.
This strong monthly performance has pushed the year-to-date gains for cocoa futures on the commodities market to over 100%. Notably, the contracts have delivered positive returns in 8 out of 10 months of 2024, as of market opening on November 20.
However, according to AFEX’s Wet Season Report, Nigeria’s favorable climate in the southern region could position the country for gains amid the rise in global cocoa prices.
Market trend
Cocoa futures, which represent tradeable contracts tracking the global balance of cocoa supply and demand, have experienced notable fluctuations in 2024.
- The year began with a notable increase, as gains picked up pace significantly between January and March, exceeding the levels seen in the same period of 2023.
- By March, cocoa futures had jumped by an impressive 132%, reaching 9,776 units and reflecting strong bullish momentum.
- The dramatic rise in March was largely driven by adverse weather conditions in Ghana, the world’s second-largest cocoa producer, where strong seasonal winds and insufficient rainfall disrupted the cocoa harvest, tightening supply and driving prices higher.
- Since March, the market has struggled to find stability, with ongoing supply concerns fueling further volatility.
- As of the market opening on November 20, cocoa futures had risen by more than 16% in the month, climbing from an opening price of 7,325.50 USD to 8,563.00 USD, with a trading volume of 6,800 units.
This sustained upward movement highlights ongoing supply pressures and increasing global demand.
Nigeria’s cocoa production set for growth amid rising global prices
Cocoa production in Nigeria is forecast to grow by up to 10% in 2024, driven by elevated international cocoa prices and strategic farming initiatives.
Over the past year, soaring prices in the global market have provided strong incentives for Nigerian farmers to boost output, according to the AFEX 2024 Wet Season Report.
The report shows that long-term cocoa seedling programs started in recent years are now maturing, boosting harvest volumes this season.
“Cocoa production is expected to experience an upward trend this season after several years of decline,” the report notes. “This growth is primarily driven by historically high cocoa prices, which have resulted from increased international demand and supply shortages in major producing countries.”
Favourable weather conditions in the southwestern region—Nigeria’s primary cocoa-producing area—are a key factor driving this growth, with the report projecting a 10% increase in production, bringing total output to approximately 320,000 metric tons in 2024.
The findings also shed light on the demographics of Nigeria’s cocoa farming sector.
- About 76% of farmers surveyed are smallholders cultivating less than 2 hectares, while only 3% manage farms larger than 5 hectares.
- Most of these farmers are aged between 36 and 45, reflecting a predominantly middle-aged workforce in the sector.
