MARKET NEWS

By Ekow Dontoh

(Bloomberg) -- Ghana cut its cocoa harvest forecast for a second time this season, a setback that risks further fanning a price rally that’s already hit both chocolatiers and consumers.

The world’s second-largest grower has trimmed its outlook for the season that began in September by 5%, following recent on-the-ground crop surveys, according to people familiar with the matter. 

That would suggest a harvest of about 617,500 tons, after the country already lowered its crop expectation down 20% to 650,000 tons in August this year.

Hotter-than-expected weather and a lack of rain are the reason for the revision, said the people, who asked not to be named because the information is private. The seasonal hot and dry Harrmattan winds, which set in from December to February, also hurt cocoa prospects, they said.

Futures traded in New York climbed as much as 2.1% on Friday, later trimming gains. The market is heading for an eighth-straight weekly gain.

Prices soared earlier this year as weak harvests in West Africa, the top producing region, plunged the world into a third straight supply deficit. The rally recently regained momentum as adverse weather further threatens farms there, limiting the chance to rebuild already low global stockpiles. 

This week, prices have flirted with a new record of $13,000 a ton in New York. The market volatility has been further amplified by low trading activity, with aggregate open interest near the lowest in more than a decade. Futures are up more than 7% this week. 

Earlier this week, the Ghana Meteorological Agency warned of more intense heat waves over the next year.

“We are experiencing an unusual increase in temperatures, and it is important for the public to take the necessary precautions to stay healthy and hydrated,” Joshua Asamoah, a senior meteorologist told Accra-based Adom News.

Still, Ghana’s harvest in 2024-25 would be better than the previous season. The country produced 480,000 tons in 2023-24, according to the International Cocoa Organization. 

A spokesperson for Ghana Cocoa Board didn’t respond to requests for comment. 

--With assistance from Mumbi Gitau and Dayanne Sousa.

©2024 Bloomberg L.P.