Cocoa soared to a 13-year high as heavy rain across West Africa accelerated the spread of a rot-causing disease, threatening output in some of the world’s biggest producers.
Farmers in Ivory Coast, Ghana and Nigeria have reported signs of blackpod disease, which causes cocoa pods to turn black and rot. That may affect the quality or curb output of beans. The disease can be catastrophic for supply, according to Fuad Mohammed Abubakar, head of Ghana Cocoa Marketing Co.
Both the output and quality of the mid-crop is likely to be disappointing compared to last year, said Maxime Godé, a farmer in the mid-west part of Ivory Coast. That’s spurring concern that the smaller harvest won’t be sufficient to plug a shortfall after the harvest of the main crop.
Cocoa is harvested twice a year, mostly from October to March for the main crop and from May to August for the mid-crop.
Cocoa futures in London have soared more than 20% this year. Most-active futures reached £2,544 a ton on Monday, the highest since mid-2010.
In Nigeria, farmer Sola Ogunsola said cocoa farms in coastal areas have been seriously affected as many of their developing pods were lost to the disease. The rain has also made some roads impassable, making it difficult for African producers to spray chemicals in plantations or deliver cocoa to the ports.
Ivory Coast farmers have sent 2.24 million tons to ports in the season through July 2, slightly less than estimates of about 2.29 million tons a year ago.
The return of El Niño conditions is also supporting prices because the weather phenomenon tends to bring hot and dry conditions to West Africa, risking an output drop of as much as 10%, according to Bloomberg Intelligence estimates.
Source: Bloomberg