Despite robust growth of 6.2 percent in 2020/21 North American grind, bags of cocoa beans in licensed warehouse continued to outpace levels seen in the previous five seasons. We finished 2021 with around 4.675 million bags, setting a recent record.

As the main cocoa crop now flowing out of West African ports, we are now at the time of the year when domestic bean stocks gradually start climbing again. Stocks typically climb in the first half of the calendar year, usually peaking by midyear. Even if crops are down this year, the current stocks at the start of 2022 bode well for as inventories should be more than sufficient to meet demand throughout the year.

The other positive news is that we finished crop year 2020/21 with grind essentially back at pre-pandemic levels based on demand for cocoa products. As the country gradually emerges out of pandemic-driven closures, grind is expected to grow again in 2022, although the pace of expansion may slow in the coming quarters. The most recent results were up 4.3 percent for Q3 (July-September) and similar results for Q4 grind are expected later this month.

Several variables may provide headwinds for grind in 2022, however. Among these are rising interest rates as the Federal Reserve grapples with inflation, raising the cost of financing. The rapid spread of the COVID-19 Omicron variant will further impact worker availability around the country.

Despite these challenges, the market still expects modest growth both in North America and worldwide. The good news for the U.S. is that stocks of beans are up over a third at the start of 2022, which will allow growth in consumption even if crops lag a bit in the months ahead.

U.S. certified cocoa bean stocks

Source: ICE, DTN, McKeany-Flavell
Posted by: Information Services
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