Will cocoa prices sustain new highs?

Cocoa prices have surged to record highs in both New York and London, reaching levels not seen in over a decade. The recent increase in prices can be attributed to supply and demand dynamics influenced by meteorological changes, particularly in West African cocoa-producing countries. With cocoa farmers in Cote D’ivoire remaining cautious due to the impact of recent floods, the industry is facing uncertainties about the upcoming main crop season. Foluso Adeojo, Factory Manager at FTN Cocoa, provided valuable insights into the current market conditions and Nigeria's cocoa production prospects. Adeojo highlighted that the price movements are closely tied to weather conditions across the globe, especially in West Africa, a major cocoa supplier to the global market. He explained that if weather conditions begin to improve by October, there could potentially be a downturn in cocoa prices. Adeojo emphasized the challenges faced by cocoa-producing countries like Cote D’ivoire and Ghana in dealing with climate change and increasing production volumes. Nigeria, on the other hand, is working towards reaching a production volume of 500,000 metric tons by 2024, albeit at a slower pace compared to its West African counterparts. Adeojo stressed the importance of government intervention in supporting cocoa farmers and the industry as a whole. He highlighted the need for financial resources, technical expertise, and organizational support to mitigate climate shocks, improve seedlings, and boost production. Adeojo also shared updates on FTN Cocoa's restructuring process, aimed at enhancing the company's operations and financial stability. He expressed confidence that the reforms would lead to improved investor interest, profitability, and job creation in the market. In the short to medium term, FTN Cocoa plans to fulfill its financial obligations, contribute to the country's GDP, and create employment opportunities. Despite the current challenges facing the cocoa industry, Adeojo remains optimistic about the potential for growth and sustainability in the sector.