AFEX Cocoa Outlook For 2019/ 2020 Season

Must Read

TAJBank Launches Nigeria’s 2nd Non-Interest Financial Institution (Photos)

Abuja Nigeria   December 2nd 2019, TAJBank, Nigeria’s second Non –Interest financial institution, has announced the launch of its services...

Buhari Appoints CBN Deputy Gov, Edward Adamu, As AMCON Chairman

President Muhammadu Buhari has appointed Mr Edward Adamu as Chairman of the Asset Management Corporation of Nigeria (AMCON). The appointment...

List of Guaranty Trust Bank Sort Codes & Branches (with addresses) in Nigeria

The sort code is a number which usually identifies both the bank and the branch where an account is...
- Advertisement -
- Advertisement -

Insights on the commodity markets in Nigeria are critical as we enter into the 2019/2020 season. All key crops traded on AFEX Commodities Exchange are being considered in view of the demand and supply dynamics as well as a look into possible proactive measures that investors can take. Read below for the AFEX Cocoa outlook for the 2019/2020 season in Nigeria.

Cocoa Outlook Supply-Side Dynamics

The rains for the season have been described as excessive and could impact quantity and quality of yield for the season. Also, the main crop flowering window is extended, delaying the harvest in most parts – extending into February 2020.

Some volumes are, however, already being transacted in the market with a number of aggregators utilizing mechanical dryers to achieve acceptable moisture levels. We expect the rains to fully come to a halt in the coming weeks and full steam aggregation to commence from November 2019, with stable moisture content levels of 8% and below.

With the reports of high incidence of black pod disease in Ghana and the introduction of the cocoa price floor by Cote D’Ivoire and Ghana earlier in the year, there is a resultant effect of increased demand for Nigerian Cocoa which will affect price coupled with the closure of land borders in Nigeria through which neighbouring countries would easily transport their volumes of cocoa into the Nigerian market to augment supply.

Read:  Weekly Market Report: About N35 billion Shares Worth Traded...

Prices opened in the south-west at N650, 000/MT at the farm gate at the beginning of October, and are currently at N720, 000/MT. The market for cocoa in Nigeria is highly speculative with traders and merchants speculating as high as N900, 000/MT at the peak of the season in January 2020.

Read:  How Poor Electricity Supply May Deny Nigeria From Taking Advantages From The AfCFTA Agreement - GENCOS

Overall, this season will be characterized by quick price appreciation, scarcity and high incidence of poor quality beans.

Cocoa Outlook Demand Side Dynamics

International buyers are entering into strategic partnerships with Nigerian businesses to aggregate volumes of cocoa from Nigeria. There is an increasing demand for Nigerian Cocoa in the international market stemming from the envisaged shortfall of cocoa from Ghana as a result of the black pod disease reported to plague the crop.

Read:  Kwik Delivery Partners With Winpart To Deliver Spare Parts In Less Than 2 Hours To Customers In Nigeria

There is also the renewed interest in Nigeria around the agricultural sector as an alternative to crude oil, leading to significant investments and deliberate efforts being made towards attaining quality specifications of the international market, which typically attracts a premium.

A number of the large multinationals have already commenced purchasing and we envisage there will be a differential of up to 40% between opening season price and peak season price per MT at the farm gate.

Strategy to Adopt

We recommend an aggressive aggregation strategy backed by provision of liquidity with an objective to achieve volume targets, but at a comparative price advantage to the competition.

The utilization of AFEX’s supply chain network will reduce the cost of aggregation as well as provide comfort to the buyers by assuring the quality and quantity of products.

This post first appeared on the AFEX blog

- Advertisement -

Subscribe to BrandSpur Ng

Subscribe for latest updates. Signup to best of brands and business news, informed analysis and opinions among others that can propel you, your business or brand to greater heights.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

Standard Chartered Bank Nigeria Names African Giant & Grammy Awards Nominee, Burna Boy as its Digital Bank Ambassador

Nigeria – 9 December 2019 - Standard Chartered Bank today announced Nigerian icon, Damini Ogulu, AKA Burna Boy as...

MUSON Appreciates MTN Foundation, others with Donors Concert

The Musical Society of Nigeria (MUSON) hosted donors to an appreciation concert as part of its end of year activities. The event, which held...

Waterfront Suites wins ‘Best Seaview Serviced Apartment’ at the Squarefoot Best of the Best Awards 2019

HONG KONG, CHINA - Media OutReach - 11 December 2019 - Waterfront Suites is proud to announce that it has been awarded "Best Seaview Serviced Apartment"...

Australia Emerges As The Top Employment Location For SP Jain’s Undergraduates From The Class Of 2019

Over 50% of the class secured jobs in Australia, with average starting salaries of AUD 55,000. UAE, Singapore, Vietnam, Japan, Rwanda, India, Germany, Argentina,...

More Articles Like This