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Yaoundé - 13 April 2024 -
Agriculture

Cameroon cocoa hits record prices amid global demand surge

Cameroon cocoa hits record prices amid global demand surge
  • Comments   -   Thursday, 07 March 2024 14:46

(Business in Cameroon) - During a collective cocoa sale on March 5, 2024, in Abong-Mbang, a key cocoa-producing area in Eastern Cameroon, producer prices per kilogram soared to a new record of CFA4,225, marking the highest rate both nationally and globally. Following this milestone, on March 6, 2024, Cameroon's Minister of Trade, Luc Magloire Mbarga Atangana, issued an official statement celebrating the remarkable achievement of the Cameroonian cocoa market, attributing its global prominence to favorable international market dynamics and the consistent improvement in the quality of the nation's cocoa beans.

Indeed, the continued improvement in beans quality, coupled with the current favorable conditions of Cameroon's cocoa sector, which has seen producer prices rising for months, is a result of the international market's situation. This includes projected production declines in Côte d'Ivoire and Ghana, the world's leading producers, mainly due to climate-related issues and aging plantations. According to forecasts by the International Cocoa Organization (ICCO), global production for 2023-2024 is expected to fall by 11% to 4.45 million tons. This is anticipated to lead to a market deficit of 374,000 tons by September 2024, a significant increase from the 74,000 tons recorded during the 2022/2023 cocoa season.

International price surge

The adverse conditions in the international market have led to a surge in cocoa prices, translating into better remuneration for producers in countries like Cameroon. As reported by Ecofin Agency, "since the start of 2024, cocoa has been the best-performing agricultural commodity on the markets, gaining 56.4%, or more than $2,300 per ton annually. After breaking the July 2, 1977 record of $5379 in early February, the price of the benchmark cocoa contract for March delivery on the Intercontinental Exchange in New York broke the $6000 barrier, reaching a daily high of $6929. On February 26, 2024, prices closed at $6884 per ton. All in all, this is a real breakthrough for brown gold, which only a year earlier was trading at $2,668 a ton”.

Beyond the favorable international context, Cameroonian producers are also benefiting from the strategy of collective sales, which enhances their bargaining power against buyers. This sales method, fostering competition among buyers and subsequently increasing producer remuneration, coupled with the robust demand, explains the surge in prices for Cameroon's distinctive red-brown cocoa beans since the start of the 2023-2024 campaign. Furthermore, the battle between exporters, typically affiliated with major international traders, and local processors vying for control over the increasingly scarce beans has intensified.

As exporters continue to make massive purchases, the country has welcomed three new local processing plants in less than three years (Atlantic Cocoa, Neo Industry, and Africa Processing), with combined capacities approaching 100,000 tons.

Several operators are prepared to increase their bids to acquire beans, aiming to maintain operations in their frequently idle factories caused by a shortage of raw materials.

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