• Global cocoa prices have fallen to just over $6,000 a ton, about half last year’s level.
• Exporters are struggling to honor contracts, leading to bean buildups at ports.

In Côte d’Ivoire, the Coffee-Cocoa Council (CCC) may buy around 200,000 tons of cocoa from producers after receiving government approval. The information was reported on Monday, December 15, by Bloomberg, citing sources familiar with the matter who asked not to be named.

The regulator’s move aims to limit the risk of payment defaults amid a sharp drop in global cocoa prices.

Cocoa prices are currently hovering slightly above $6,000 a ton, about half their level a year ago, driven by expectations of improved global supply and a surplus in the 2024/2025 season.

In this environment, exporters that signed contracts with the CCC based on earlier, higher prices are struggling to meet their commitments. In recent weeks, this has led to a buildup of cocoa beans at the export ports of San Pedro and Abidjan.

According to Bloomberg data, weekly cocoa arrivals during the four weeks of November were at or above 100,000 tons, a high level compared with the same period over the previous two years.

The news agency reported that the regulator met on December 11 with representatives of about a dozen companies at risk of default. The purchases could be carried out through Transcao-CI, a CCC subsidiary created in February 2019 and also owned at 25% by Malaysia’s Guan Chong Berhad (GCB).

If confirmed, the move would mark a second bailout by the regulator after the one carried out in 2016/2017.

At that time, a surprise increase in producer prices, announced by the government just two days before the start of the season, caught several exporters off guard. They were already under pressure from falling global prices and banks’ refusal to increase existing credit lines.

The situation led to widespread defaults in early 2017, affecting a combined volume of about 350,000 tons. To manage the crisis, the CCC resold the defaulted contracts on the global market at lower prices, recording an unprecedented loss of more than CFA200 billion, or about $358 million.

Côte d’Ivoire’s cocoa production is expected to reach 1.85 million tons in the 2024/2025 season, up from 1.67 million tons in 2023/2024, according to data compiled by the International Cocoa Organization (ICCO).

Espoir Olodo