Joe Jackson, CEO of Dalex Finance, has projected that the Ghana cedi could face renewed depreciation following a downward revision of the country’s cocoa harvest forecast for the 2024-25 season. The Ghana Cocoa Board recently revised its cocoa harvest forecast to 617,500 tons, a 5% reduction from earlier expectations, due to unfavorable weather conditions, including hotter-than-expected temperatures, insufficient rainfall, and the dry Harmattan winds that affect cocoa crop development between December and February.
This follows a previous revision in August, when the forecast was reduced by 20%, lowering the figure from the initial estimate to 650,000 tons. These weather-related challenges are expected to result in a global supply shortage, which has already pushed cocoa futures prices to record highs. In New York, cocoa futures recently peaked at $13,000 per ton.
The situation in Ghana, the world’s second-largest cocoa producer, reflects similar challenges faced by other West African cocoa-producing countries, which have seen adverse weather conditions negatively impact their yields. The reduced harvests and the global supply deficit have contributed to higher cocoa prices, marking the third consecutive year of such deficits, which has led to market volatility. Traders now expect further price fluctuations, with little hope of replenishing global cocoa stockpiles in the near future.
Despite this reduction, the projected 2024-25 harvest is still expected to exceed the previous year’s output of 480,000 tons. However, the Ghana Meteorological Agency has forecasted more intense heat waves in the upcoming year, raising concerns about future crop yields. The Ghana Cocoa Board has not yet issued an official statement on the current situation.
As cocoa prices continue to climb, outperforming other commodities in 2024, the effects are being felt throughout the global chocolate industry. Manufacturers and consumers alike are facing higher costs due to the tightened supply, and the overall impact on global markets remains to be seen. With the Ghanaian cedi under additional pressure from the lowered cocoa forecast, Joe Jackson’s warning about possible depreciation is particularly timely. Should harvests continue to decline, the cedi could see continued depreciation, adding to the economic challenges in Ghana.
