Africa produces approximately 70% of the world’s cocoa and
remains the leading region in global cocoa production. Among the top producers,
Côte d'Ivoire, Ghana, Cameroon, and Nigeria play pivotal roles. Nigeria, in
particular, holds a significant market share as one of the largest cocoa
producers, contributing to both regional and global supply. In recent months,
global cocoa markets have experienced significant volatility. Key factors
driving these trends include climate change impacts, shifts in trade policies,
and other economic factors. Cocoa beans, a staple in Cardinal Torch's
portfolio, has seen price fluctuations due to climate change affecting major
producing regions like West Africa.
These factors have created a challenging environment for
businesses operating in the cocoa market. For many companies like Cardinal
Torch what operate in supply side of the cocoa value chain, this volatility has
eroded working capital, as the unpredictable fluctuations in terminal prices
have made it difficult to maintain stable financial footing. The surge in cocoa
futures prices, driven by these market dynamics, has pushed costs higher and
squeezed margins.
Here are some key data trends for Q1 2024 that we find
particularly noteworthy:
The international chocolate and beverage markets have also
felt the impact. With rising cocoa prices, end users are now facing increased
costs, which are gradually being passed down the supply chain. As the largest
producers, including Nigeria, grapple with these market conditions, the effects
are being transferred to consumers worldwide, who are experiencing price
increases for their favorite products. The shortage in supply caused by climate
change and diseases has further strained the market, intensifying the pressure
on prices.
At Cardinal Torch, we are well-positioned to leverage these
trends. Our trading team excels at connecting market changes with real-world
impacts and market reactions. Our in-depth insights into how various factors
interact to influence the market and how global and regional trends affect
pricing and consumption are used to enhance our trading strategies and
decision-making processes. By utilizing advanced market analysis tools and
nurturing strong relationships with our stakeholders, we remain agile and responsive
to market changes.
Additionally, our funding partners have been instrumental in
helping us adjust to the situation. Their support has not only allowed us to
mitigate the effects of market volatility but has also enabled us to maintain
year-on-year growth in supply capacity despite the over 1,000% increase in
produce price per ton. By leveraging these partnerships, we have been able to
implement strategies that ensure continued growth and stability. Our commitment
to responsible sourcing and supply chain transparency further strengthens our
position in navigating the ongoing challenges in the global cocoa market.