US chocolate giant Hershey challenges African cocoa giants
Audio 01:56
The American chocolate giant Hershey sourced certified cocoa directly from the New York Stock Exchange, cheaper than that of Ghana and the Ivory Coast.
ASSOCIATED PRESS - Carolyn Kaster
By: Claire Fages Follow
6 min
Unusually, American chocolate maker Hershey sourced cocoa from the New York Stock Exchange last week, rather than having it shipped from Ghana and Ivory Coast.
One way to avoid paying the decent income differential imposed by the two major producing countries.
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The American Hershey challenges the African cocoa giants.
The world's fourth-largest chocolate maker took delivery of no less than 30,000 tonnes of beans from New York Stock Exchange warehouses last week, which is very rare.
Usually traders unwind their position before the end of the contract rather than accepting certified cocoa from the futures markets, as the stock exchange primarily serves them to arbitrate virtually to manage their price risk.
The Covid calls into question the decent income differential
But cocoa certified from the New York Stock Exchange was decidedly cheaper than that from Ghana and the Ivory Coast.
Because the two African producer countries have imposed on their buyers a decent income differential on the new harvest, the one coming out of the cocoa fields since last month.
This premium is at its worst for manufacturers, while the cocoa market has been disrupted by the Covid pandemic.
Bean grinding has fallen on all continents.
Without knowing whether it is the end consumer demand that is declining or if the industry is selling off its stocks of beans and intermediate products, liquor, powder and cocoa butter.
It is true that Easter chocolates have sold less well and that many restaurants are still closed.
The products that resist the best are chocolate cookies or spreads.
We will not really know the consumer trend until after the Christmas holidays.
Late cocoa sales in Ghana and Côte d'Ivoire
But at the global level, the supply is anyway in excess of demand, underlines a trader, and the industry is no longer so keen to pay the decent income differential imposed by Ghana and the Ivory Coast. before the pandemic.
As proof, sales of beans for the current campaign are 500,000 tonnes behind last year.
The two West African cocoa giants are resuscitating their standoff: they are now threatening the chocolate industry to suspend the UTZ-Rainforest certification labels appreciated by consumers and which allow major brands to earn margins on products on the shelves.
New showdown between the giants of cocoa and industry
The ability of Côte d'Ivoire and Ghana to impose their price on the international market is currently being tested, recognizes an analyst from N'Kalo.
In the meantime, the unexpected purchases of the American chocolate giant have caused the prices of cocoa on the New York Stock Exchange to rebound violently: they have gone from 2,300 to nearly 2,700 dollars per tonne.
An increase disconnected from the current reality of the market.
And that hurts all traders and speculators who had not yet bought back their positions on the futures market.
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United States
Ghana
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