Ghana seeks to limit some cocoa purchases as shortages persist

Ghana is seeking to limit some cocoa purchases for next season, a sign that severe shortages that have plagued the market and sent futures prices to a record may be far from over.

In a letter to buyers this week, the world’s No. 2 producer said it will determine how much of the next crop can be sold as specialty cocoa based on total production, and that the regulator will allocate beans “equitably” among buyers. Specialty cocoa beans include the ones with certification such as Fairtrade, UTZ and Rainforest Alliance, along with traceable beans.

The move to restrict some purchases signals there’s concern the next crop in Ghana may not recover as significantly as some market watchers expect, even with favorable weather and timely supplies of pesticide and fertilizer. Cocoa futures traded in New York broke record after record this year, but have declined more than 30% since finally peaking in April.

“Volumes to be traded as specialty during the 2024-25 cocoa year will be determined as a percentage of total production and allocated equitably” to registered buyers, Emmanuel A. Opoku, deputy chief executive responsible for operation at the Ghana Cocoa Board, said in the letter dated July 16 and seen by Bloomberg.

A spokesman for Ghana Cocoa Board didn’t respond to telephone calls and a text message seeking comment.

Ghana has had to postpone deliveries of at least 250,000 metric tons of cocoa to the 2024-25 season that starts in October after production plunged. The country and its neighbor Ivory Coast, the world’s largest producer, have been battling the spread of swollen shoot disease.

Still, Ivory Coast expects its harvest in 2024-25 to rebound to 2 million tons, from an estimated 1.8 million tons by the end of the current season, while Ghana sees production reaching 700,000 tons from about 425,000 tons.

The Ghana Cocoa Board is now requesting buyers who seek to purchase specialty cocoa for next season to provide information including off-take agreements and shipment plans, as well as details on the amount of cocoa and the type of specialty beans companies plan to buy, according to the letter.

The regulator, known as Cocobod, “will provide the approved tonnage for specialty cocoa for each” registered buyer “after the submission of their projections for the season,” Opoku said.