Cocoa Prices Retreat Following Ghana Farmer Pay Proposal
ICE NY cocoa dropped 0.57% as market sentiment shifted from supply concerns to oversupply data.
December ICE New York cocoa futures closed down 34 points, or 0.57%, at 5,940 per metric ton. December ICE London cocoa #7 futures fell 31 points, or 0.71%, to 4,350 per metric ton. These declines mark a reversal from the recent strength seen in the market.
Prices had risen earlier in the week on news of a proposed wage increase for farmers. The current drop reflects a broader reassessment of supply levels. Traders are currently weighing the impact of higher producer costs against rising global inventories.
Ghana Proposes Higher Farmer Compensation
Ghana's cocoa regulator proposed a 6% increase in farmer pay for the 2026/27 season. This move could lead to tighter supply if farmers withhold beans. Higher costs for producers typically support price floors in the medium term.
However, the market remains cautious about the immediate impact. Barry Callebaut noted that the global market is well supplied. The company indicated that current stock levels provide a buffer against price volatility.
Ivory Coast Output Shows Significant Growth
Ivory Coast farmers shipped 2.14 million metric tons of cocoa to ports this season. This volume represents a 19% increase compared to the same period last year. The Ivory Coast remains the world's largest cocoa producer.
The national harvest from June 2025 to June 2026 totaled 2.06 million metric tons. This figure is up 30% from the 1.58 million metric tons recorded a year ago. Strong production from the top exporter exerts downward pressure on global prices.
Inventories Reach Two Year Highs
ICE cocoa inventories rose to 3,436,742 bags last Friday. This level marks a two-year high for exchange stocks. Rising inventories signal ample supply available for immediate delivery.
Despite these highs, quality concerns persist in West Africa. Black pod disease is spreading due to cloudy weather and limited sunshine. These conditions are lowering the quality of bean crops in Ivory Coast and Ghana.
Ghana estimates its 2026/27 crop at 650,000 metric tons. This is a 13% decline from the 750,000 metric tons produced last year. Early surveys in Ivory Coast also point to a weak main harvest, with estimates down 18% from the previous season. GN markets/commodities (en-US) notes that these supply risks provide underlying support for prices despite the recent drop.
