According to surveys carried out by Bloomberg, cocoa processing undoubtedly declined in the first quarter on falling chocolate demand because of the COVID-19 pandemic.
In Europe, which is the most significant consuming region, grinding may fall by 3% more from a year earlier. Estimates ranged from a drop of 1% to as much as 11%. North America may face a decline of 5.3%, the median of six projections for a decrease of 3% to 7.5%.
Asian processing may fall by 9%, according to four estimates. The region led the expansion in grinding before the pandemic as companies set up facilities in countries, including Malaysia, to satisfy the growing demand for chocolate.
Cote d’Ivoire, which is the top bean producer, and also Ghana, the second-biggest producer, imposed a premium of $400 a metric ton for a so-called living income differential for the 2020-21 cocoa crop, increasing costs for processors. On Wednesday, futures in New York fell 2.8% to $2,224 a ton at 10:37 a.m. They have dropped 12% this year.
“Chocolate demand will fall as a direct effect of rising prices and a sharp contraction in economic growth,” stated vice president at JSG Commodities in Norwalk, Connecticut, Eric Bergman. On top of the West African premium, “the pandemic is now increasing the decline in consumption, as disposable income for luxury goods continues to decline,” he added.
The International Monetary Fund estimated that global gross domestic product would lessen by 3% this year. During the peak of the Great Recession, global cocoa grindings fell 6.3% in 2008-09.
The impact of the economic decline will be more substantial in the second quarter. As a result of the “lost retail sales, like no going for dessert, no wedding season of massive buffets laden with chocolate desserts, no airport duty-free chocolate,” stated Judy Ganes, president of J. Ganes Consulting.
The European Cocoa Association is going to release first-quarter data on April 22. The figures from the U.S. National Confectioners Association are expected to be revealed on April 16.
