Cocoa receipt in the third quarter of 2023 is 5% higher than the previous period

The third quarter of 2023 recorded 5% growth in the volume of national beans received by the cocoa processing industry. There were 69.646 tons received in the period, in contrast to the 66.075 tons received in the previous quarter, according to data compiled by SindiDados – Campos Consultores and released by the National Association of Cocoa Processing Industries (AIPC). “The increase was already expected, as there was a delay in the arrival of the early harvest, due to climate issues and losses caused by pests, such as witches' broom and brown rot. Despite the positive numbers, there is an expectation that the final volume will be lower than expected. Many producers have reported considerable losses due to these pests”, explains the executive president of AIPC, Anna Paula Losi.

When comparing the accumulated receipt volume from January to September 2023 with the receipt volume from the same period in 2022, there was an increase of 6%, going from 153.515 tons in the previous year to 162.766 tons in 2023. Losi explains, however, there was an increase in the number of companies reporting their data to SindiDados: “Until 2022, only five companies reported information related to receiving and processing almonds. However, there is a constant effort to make the sectoral data even more reliable and, since January 2023, six companies have reported this information to SindiDados, thus increasing the database”.

In the third quarter, 64.024 tons of almonds were processed, an increase of 3% compared to the 62.426 tons in the previous quarter. With regard to the year to date, the period from January to September 2023, processing grew by around 15% compared to the same period of the previous year, going from 165.356 tons to 190.466 tons. “The more stable and positive production scenario tends to positively impact processing levels. Furthermore, expectations of growth in national production have encouraged increased investment in processing capacity. It is noteworthy that, this quarter, there were no imports of cocoa beans”, he ponders.

Exports of derivatives, which mainly serve the markets of Argentina, the United States and Chile, in that order, fell 13% in the third quarter of 2023, going from 12.400 tons in the second quarter to 10.764 tons in the last quarter. Anna Paula explains that “despite reflecting the trends of recent years, in comparison by period, there is a retraction in exports driven by trade with Argentina, whose drop was 22%. The neighboring country is the main market for Brazilian derivatives and has been going through an economic crisis for a few years, which has negatively impacted exports to this country.”

Receipt by state

Bahia was responsible for 57,31% of the total volume of national almonds received by the processing industry, in the third quarter of 2023, totaling 39.920 tons. Compared to the previous quarter, when the volume supplied by the state was 37.149 tons, there was a growth of approximately 7%. Pará was responsible for 39% of the total volume received in the quarter, totaling 27.160 tons, a stable value compared to the previous quarter, when receipt was 27.028 tons. Espírito Santo (1.923 tons), Rondônia (605 tons) and other states (38 tons) were responsible for 3,7% of the total volume received in the third quarter of 2023.

International market analysis

Leonardo Rossetti and Alan Lima, from StoneX's Market department, assess that the cocoa market has been marked by an upward trend in futures prices since the second half of 2022. The New York and London stock exchanges recorded highs of 12 and 46 years respectively, reflecting widespread concern about possible shortages in the 2023-24 harvest. This apprehension has its roots in the El Niño phenomenon, which has the potential to adversely affect the climate in the main cocoa-producing region, West Africa. El Niño tends to bring higher temperatures and drier weather, which harms the performance of cocoa crops.

Although above-average rainfall in Côte d'Ivoire, which is the world's largest cocoa producer, has ensured an adequate supply of water in plantations, there is still some concern about the supply of almonds. However, this concern is mitigated by the good initial performance expected in the harvest, which runs until December.

The International Cocoa Organization (ICCO) revised its global deficit estimates for the 2022-23 season, going from -142 thousand to -116 thousand tons of beans. Even though there has been a slight improvement in the balance, global stocks remain in decline and concerns about production in the next harvest continue to drive prices. Uncertainty persists regarding the possible third consecutive deficit in the balance of supply and demand in the cocoa market in the 2023-24 season.

In relation to El Niño, if the phenomenon intensifies, it could impact the Harmattan, a dry and dusty wind that blows from the Sahara Desert towards the Atlantic, during the dry season in West Africa. This could result in considerable production losses by 2024.

In short, the cocoa market is experiencing great volatility, influenced by climatic factors, variations in supply and demand, and adaptations in the chocolate industry in response to rising prices. The El Niño phenomenon and its possible effects on cocoa production continue to be a significant source of uncertainty in the market, which tends to keep prices supported.