Ivory Coast cocoa backlog threatens forward sales, sector sources say

ABIDJAN: Ivory Coast's large backlog of unsold cocoa could cause an around 10% slump in the guaranteed price for the 2020/21 mid-crop and jeopardise the outlook for next season, industry sources said, amid a slowdown in demand linked to COVID-19.

The world's largest cocoa producer would normally have sold all of the current season's main crop by now, but up to 150,000 tonnes of beans, around 9% of the estimated harvest, have yet to find buyers, two sources at the country's cocoa regulator said.

The unwanted stockpile has hit forward sales for the mid-crop harvest, which begins in April. Only around 180,000 tonnes of its expected 500,000 tonnes have so far been sold, four exporters told Reuters.

"It's too little and it sucks," said the director of a European export company based in Abidjan on condition of anonymity.

The crisis has forced some farmers to sell below the guaranteed minimum price and prompted the country's largest growers' union to call this week for a strike and threaten to block port deliveries.

The guaranteed price for the mid-crop could fall to around 750 CFA francs ($1.39) per kg versus last year's 825 CFA francs, said one of the sources at the regulator, the Coffee and Cocoa Council (CCC).

The government had set the farmgate price for the 2020/21 main crop at 1,000 CFA francs per kg, but some farmers have said they are struggling to sell their beans at 800 CFA francs per kg for the main crop due to the glut.

"It's a very challenging season," the CCC source said.

The volume of unsold main-crop beans in farm warehouses could reach 200,000 tonnes by the end of January, the exporters and sources at three cocoa cooperatives said.

Unlike in previous years, no forward sales for next season have yet been agreed due to the backlog, the two CCC sources said.

One of them said the priority was to sell this season's remaining volumes to prevent a stockpile pressuring prices into next season.

"We're behind on sales for next season, but there are more urgent things to sort out first," the source said.