As speculators have been establishing new longs and buying into strength, Ivory Coast and Ghana have been busy forward selling next year’s crop and working to coordinate their cocoa activities. One month ago, speculative funds were effectively flat, neither long nor short. Since then, however, they’ve added more than 35,000 fresh longs, taking on some 15 percent of open interest longs, per CFTC reporting.
This move seems contrary to the healthy pace of arrivals confirming a record crop in Ivory Coast, estimated now near 2.15 MMT, while Ghana Cocobod has bought just under 850,000 MT with three months still left in the season. On Wednesday, Ghanaian and Ivorian officials announced that sales of the 2020/21 crop would be halted until key industry stakeholders made commitments to help keep a price floor to support cocoa farmers’ returns. Collectively, these two countries account for some 65 percent of total global production, and this move parallels moves by commodity industry organizations, like OPEC, that have sought to influence prices and control production.
The two countries are coordinating efforts to raise prices of cocoa and returns to farmers following several years of sideways price movement. Officials from both countries have said they would suspend forward marketing and sales of cocoa for 2020/21 until key stakeholders had agreed to a minimum price for cocoa of $2,600 per MT. Over 300 buyers and industry participants have reportedly agreed to this price concession, with a follow-up technical meeting to work on implementation details scheduled for July.