A few weeks into the new year, the market is eagerly anticipating Q4 2022 grind results from the major reporting regions. Perhaps serving as a harbinger, the first news on this front came from Malaysia, where total cocoa beans ground during Q54 fell to 93,763 MT, down 77 percent from Q4 2021 grind of 101,544 MT. As Malaysia is a subset of total Asian grind, this could mean a stiff headwind for that region’s cocoa use.

Grind in 2021/22 was a record for the region, so it is a vulnerable statistic, and we would not be surprised to see a miss there. Of course, we will know more soon: Asian grind will be released next week on Jan. 18, and the European and North American grinds will be released Jan. 19. Given the many price hikes from manufacturers in the inflationary environment of the past 12 months, we expect grind to struggle amid potentially slowing sales.

Meanwhile, Ghana’s cocoa regulator Cocobod is now forecasting its 2022/23 crop at 750,000 MT. It did not elaborate on whether this forecast includes cocoa that likely has been and will continue to be smuggled to neighboring Ivory Coast, driven by a stronger farmgate price and the steep depreciation of the Ghanaian cedi. We anticipate that smuggling will be significant, perhaps between 100,000 and 125,000 MT. Ultimately, that cocoa may be reported as Ivory Coast port arrivals—perhaps helping explain why Ivorian arrivals are up 14 percent YOY halfway through the main crop.

Assuming smuggling of only 100,000 MT, and adding this to the Cocobod estimate, Ghana’s total crop could be 850,000 MT. This view seems more reasonable, as opposed to the possibility of production in Ivory Coast up 14 percent and in Ghana down 10 percent, since the two neighbors experience similar cocoa growing conditions. Since Oct. 1, cocoa beans graded and sealed in Ghana are up 76 percent, an encouraging sign.

Quarterly Malaysia cocoa grind

Source: Malaysian Cocoa Board, trade sources, McKeany-Flavell
Posted by: Information Services
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