Some traders have resumed buying cocoa from top grower Ivory Coast after the local regulator agreed to sell at par with global prices, a shift from a policy that led to a standoff with buyers and left hundreds of thousands of tons unsold.
Industry regulator Le Conseil du Cafe-Cacao allowed forward purchases from the smaller of the two annual harvests — which starts in April — without applying premiums intended to boost farmer incomes and account for quality, according to people familiar with the matter, who asked not to be named because the details are private.
Bloomberg had previously reported that firms had been holding off buying because the premiums took prices $250 to $470 a ton above global futures. The move marks a significant policy adjustment for Ivory Coast, which, alongside Ghana, introduced the $400-a-ton Living Income Differential in 2020 to improve farmers’ earnings. A separate country premium was linked to quality.
The change underscores the pressures facing top producer nations as demand destruction — fueled by cocoa’s scorching rally that sent New York futures close to $13,000 a ton at the end of 2024 — has triggered a sharp price correction.
The roughly 75% slump in prices from the peak has squeezed exporters’ profit margins, and beans have been piling up on Ivory Coast’s farms and in warehouses, leading both traders and farmers to seek government support.
It’s not the first time the CCC has had to scale back the mark-ups. Buyers have sometimes negotiated down the country premium, at times even to a discount, in effect erasing even the Living Income Differential.
Earlier this week, the Ivorian Agriculture Minister Bruno Nabagné Koné told Bloomberg in an interview in Paris that the Living Income Differential wouldn’t be rolled back.
“We think that the work being done by the producers is very important and extremely challenging, so it is important that the consumer of this product guarantees a minimum income to the producer. We, as the government, are keen to reinforce this mechanism,” Koné said.
A spokesperson for the CCC didn’t respond to phone calls and text messages seeking comment.
The mid-crop accounts for roughly a quarter of annual output and is estimated at 400,000 to 450,000 tons this year.
On Wednesday, New York cocoa futures traded around $3,100 a ton after falling to levels last seen in 2023 in the previous session. The most-active contract in London has also slumped to similar lows.
In recent weeks, Ghana, the world’s second-largest producer, cut its farmgate price and said it would rework its price-setting mechanism to better align domestic prices with the global market. Ivory Coast is also considering trimming domestic prices.
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