Ghana Cocoa Price vs. Global Cocoa Price: Analyzing Trends, Challenges, and Trading Opportunities
The cocoa global market hit an all-time high, yesterday, ( 5th February 2024) at 17:45 GMT, with the price per tonne soaring to $5,105.75. In September 2023, Ghana, a major cocoa producer, declared a farmgate price of GHS20,943.84 ($1,675.5) per tonne and GHS1308.99 ($104.70) per 64kg bag for the 2023/24 crop season. This significant 63.6% increase was a direct outcome of a government policy review determining cocoa producer prices.
Source: https://cocobod.gh/news?page=11
Ghana holds a significant position as a cocoa producer, contributing substantially to the global market. With an annual production averaging around 900,000 metric tonnes, Ghana ranks second in cocoa production worldwide, accounting for approximately 20% of total global cocoa output. Cocoa remains a vital component of Ghana’s economy, employing over 800,000 farmers and supporting millions of livelihoods across the country. Additionally, cocoa exports generate significant revenue for Ghana, with earnings from cocoa and related products amounting to billions of dollars annually, making it a cornerstone of the nation’s economic stability and development.
Despite the market surge, farmers are still receiving $1,675.5 per tonne, significantly lower than the prevailing market rate of $5,105.75. The reduced cocoa supply from Ghana is attributed to lower yields caused by illegal mining (galamsay), and some farmers are opting to sell land to illegal miners instead of cultivating cocoa. This has led to a global cocoa supply decrease, contributing to the ongoing price.
Source: https://thecocoapost.com/amp/ghana-pegs-farmgate-cocoa-price-at-ghs1308-for-2023-24-crop/
From a technical analysis standpoint using the daily timeframe, the price per tonne of cocoa doubled from $2,592 on March 15, 2023, to the current market price of $5,105.75. An upward trendline, initiated at $2,592, resisted the price at $3,394.11 after a retracement from the peak at $3,764.90. Following the rejection at $3,394.11, the price resumed its upward trajectory, reaching the highest point of $4,328.23 on December 26, 2023.
The 2024 cocoa price commenced at $4,190.71, and as of February 6, 2024, it stands at approximately 22% higher at $5,105.75 per tonne.
On the 4-hour timeframe, an uptrend is evident, with an uptrend line drawn from $4,011.17 rejecting the price at $4,550.02 and continuing the upward movement after retracement from a higher price.
In trading terms, if the price retraces to the trendline and breaks it, there is a high likelihood of a downward price movement. Conversely, if the price retraces to the trendline and gets rejected, there are strong indications of a continued upward trend.
