- Price fall by 29%
The lockdown introduced in the United Kingdom to curb the spread of coronavirus has led to a weak for Nigeria’s cocoa, analysts at the AFEX Commodity Exchange has said.
The Netherland and Germany, which are countries in the Europe, are Nigeria’s cocoa top export destination.
Germany introduced a new nationwide lockdown on December 16 with non-essential shops and businesses closed while the Netherlands lockdown measures is expected to continue until February 9 and international trips have been restricted in the country until at least March 31.
AFEX, in its study of commodity prices across markets in the past week, said despite this lull, investors on the Exchange priced cocoa higher between January 18 and 22, 2021.
It sated, “The AFEX Export Index closed the reporting week bearish, being the end of its two-week bullish trend. It closed with a 1.34 per cent decline on the reporting week.
“This decline is as a result of the price decline of cocoa and ginger on the Exchange, as the demand for the cocoa remains relatively low because of the lockdown restrictions of high demand regions like the UK.”
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The price of cocoa has fallen by about 29 percent from N1.2 million per metric tonne against the current price of N850,000, according to cocoa farmers.
Nigeria’s cocoa beans is one of the top drivers of agricultural product exports and the country is currently the sixth largest cocoa producer in the world, producing about 245,000 tonnes of the commodity based on 2019 estimates.
Nigeria earned N11.42billion from cocoa beans export in the third quarter of 2020, according to the latest data from the National Bureau of Statistics.
The fermented variant of the cocoa beans is the third most traded agricultural export in Nigeria after sesame seeds and cashew nuts, while the superior quality variant is the fourth most traded.
Cocoa butter fetched Nigeria N955.08 million in the third quarter of 2020, according to NBS statistics.
The Nigerian Export Promotion Council (NEPC) has estimated that about 90 per cent of cocoa produced in Nigeria is exported as cocoa beans while, the remaining 10 per cent is processed in cocoa butter before exporting.
Analysts at AFEX estimates that that would be a fall in price of cocoa due to the impact of COVID-19 which had disrupted global market supply chain.
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The report stated, “The outlook for cocoa prices remains bearish as the effects of COVID-19 and the lockdown in high import countries for the commodity has caused chocolate producing companies to adopt inventory management strategies to minimize their losses and remain profitable.
There exists a large stock of the commodity in different warehouses in the southern regions of the country, indicating a larger demand compared to supply which usually precedes price decline.
Globally, cocoa traded at an average of $2,407 per metric tonne in December last year, according to data from the International Cocoa Organisation (ICCO).
