Cocoa futures settled at $9,764 per ton as the cash crop struggled to break above the $10,000 resistance line.
Concerns about the West African mid-crop cacao harvest, in addition to the tariffs, kept prices stable.
In London and New York, contract prices increased to trade much higher than their April 19 lows.
Cocoa’s recent run follows the revelation of better-than-expected grinding data by the major cocoa associations.
European buyers also weigh on tariffs and distortions in the global market. The EU is the largest consumer, producer, and top Chocolate exporter, with cocoa imports primarily from Côte d’Ivoire, Ghana, Cameroon, Nigeria in West Africa, and Ecuador in South America.
Nigeria taps into Cocoa production
Nigeria, where crude oil sales account for 90% of the country’s exports, is at a crossroads: either adopt new cocoa practices to diversify the economy or continue depending on oil and fall further behind in the global agribusiness competition.
Cocoa exports from Nigeria surged to N2.7 trillion in 2024, an increase of over sevenfold due to heightened demand and depreciation of the naira in the global market. This positions cocoa as a viable option for diversifying Africa’s most populous nation away from tepid oil production
Cocoa sourced from Nigeria has sometimes been sold at a discount due to inconsistent quality, reflecting variable industry standards.
Weather patterns, Farm practices weigh on Cocoa
However, recent global changes necessitating sustainable and ethical practices, such as the European Union Deforestation Regulation, have introduced governance standards.
The industry struggles to contain core growing regions in Ghana and the Ivory Coast in West Africa, which have endured a volatile price storm due to devastating weather conditions, prevailing wage starvation, and deep-seated rural poverty, forcing the region into a supply deficit.
Based on the last ICCO figures estimating the third quarter of the 2024/25 season, which marks the mid-crop starting in April, contract costs increased to $8,787 per ton in London and $9,286 per ton in New York. This is a significant drop from the highs of $12,000 a ton at the start of the year.
Western African countries were in panic mode due to WAF leading producers forecasting a bleak mid-crop yield, following some signs of improved supply conditions emerging.
In addition, the organization stated that with around five months remaining before the season concludes, clarity in the market is urgently needed from all parts of the industry.
Farmers, particularly from West Africa, find themselves in a difficult position, forcing them to sell at low prices, especially considering the currently high price level compared to recent years, resulting in ultra-low Farm Gate prices.
The ICCO’s report, in a pertinent note, remarked that cocoa has “suffered the ripple impacts of US trade tariffs which included a baseline tariff of 10% on all countries,” which, as noted earlier, has prompted farming sector organizations in West Africa to appeal to the region’s governments to relinquish control of the cocoa industry so that it can operate as a stand-alone business in the Midlands.
In the second week of April, commodities bear markets were recorded, and cocoa market pricing was also affected, with London prices declining from $8,747 to $7,332 per ton, a drop of 17%, while New York experienced a 16% depreciation, from $9,286 per ton to $7,800 per ton.
ICCO also notes that the downward trend of prices resumed in the third week of the month as the US government announced a short-term suspension of further tariffs.
This pause provided some support for cocoa and its commodities. It is important to note that the suspension did not apply to the 10% baseline tariff the US imposes on imports from all countries.
