Category: cocoa

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ICCO Predicts Cocoa Shortfall

The executive director of the International Cocoa Organization (ICCO) indicated on Monday that the 2008/09 cocoa season will yield less cocoa than previously thought. Despite a predicted decline in demand as a result of the global economic crisis, Jan Vingerhoets told Reuters that he expects a shortfall of about 45,000 tonnes.

It seems that the economic mess has not yet halted demand for chocolate. Fourth quarter grindings in Europe and the U.S. were up compared to last year albeit by small amounts, 0.1 percent and 1.85 percent respectively.

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World Cocoa Foundation Announces Sustainability Principles

The World Cocoa Foundation, an entity created by the chocolate industry and cocoa trading companies, announced today its sustainability principles and goals. The foundation was created in 2000 to address farming practices in cocoa producing countries. But I can’t shake the suspicion that its creation was also part of the industry response to the reports of child labor and child slavery on cocoa farms in West Africa. Its practice bears out that suspicion. The WCF does more publicity when it comes to child labor than the International Cocoa Initiative, which was mandated by the Harkin-Engel protocol.

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Speculation and Commodity Prices

Last night, CBS’s Sixty Minutes broadcast an investigation into the wild swings of the oil prices last year rising to $147/barrel and then falling to less than $40/barrel in a short period of time. The report offers some prime evidence that investment and hedge funds were the primary movers behind these price increases and that some investment banks may actually have profited from these movements as they invested in commodities while owning oil facilities.

Much of what happened in the oil sector can also be applied to the cocoa sector. Just substitute cocoa for oil and the same logic held true for cocoa: a sharp increase in price without evidence of a shortage of beans and a subsequent decrease without any news of a large oversupply.

The report concluded with a call for more oversight and regulation, call I can only second for the cocoa markets.

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Côte d’Ivoire Elections will be delayed again

Just as Ghana celebrated its second real transition of power to President John Atta Mills, its neighbor, the Côte d’Ivoire, continues to struggle with preparations for the long delayed election. The country has yet to settle the divisions that caused the 2002-03 civil war and despite the support of the United Nations, the preparations for country-wide elections have not made much progress.

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Ghana inaugurates New President

The world’s second largest cocoa producing country yesterday celebrated the inauguration of its new president, John Atta Mills. The event marked the end of the John Kufuor’s presidency which lasted two four-year terms. The initial election last December ended inconclusive since neither Mills nor his opponent Akufo-Addo received the necessary 50 percent of the vote. The runoff election on December 28 was extremely close–50.23 percent for Mills vs. 49.77 pecent for Akufo-Addo.

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