Cocoa futures advance on Ghana farmer price plan

Cocoa futures strengthened after Ghana’s cocoa regulator proposed a roughly 6 per cent increase in the price paid to farmers for the 2026/27 season, prompting short covering as traders assessed the implications for supplies and cross-border bean flows.

The proposed farmgate price would rise to 2,737 cedis for a 64-kilogram bag from the current 2,587 cedis, according to people familiar with the plan. The change remains subject to approval by Ghana’s finance minister and has not yet been formally announced by the Ghana Cocoa Board, or COCOBOD.

December New York cocoa gained 38 points, or 0.64 per cent, on Wednesday, while December London cocoa rose 20 pounds, or 0.47 per cent. The advance followed a sharp sell-off a day earlier, when futures fell to two-week lows as concerns over near-term supply conditions eased.

The proposed increase has drawn attention because Ghana, the world’s second-largest cocoa producer, operates a state-controlled pricing system under which farmers receive a fixed amount for beans. Any adjustment can influence selling incentives, smuggling patterns and expectations for deliveries at the start of the new crop season.

COCOBOD’s existing producer price for the 2025/26 season is 2,587 cedis per 64-kilogram bag, equivalent to 41,392 cedis a tonne. The board maintained that level for the 2026 light-crop season in June despite weaker international prices, saying the decision was intended to protect farmer incomes.

The proposed 2,737-cedi rate would further widen the farmgate price gap with neighbouring Côte d’Ivoire, the world’s largest cocoa grower. Côte d’Ivoire is expected to maintain a producer price of 1,200 CFA francs a kilogram for its 2026/27 main crop after cutting payments earlier this year as global prices retreated.

A wider gap could intensify incentives for beans to move illegally across the border toward the higher-paying market. Ghana and Côte d’Ivoire have both struggled with cocoa smuggling when official prices diverge sharply, complicating crop estimates and reducing beans available to state marketing systems.

Ghana’s proposed adjustment is also consistent with the government’s stated aim of directing at least 70 per cent of the free-on-board export value of cocoa to farmers. Higher farmgate payments can support growers facing rising labour, fertiliser and farm-maintenance costs, but they also increase financing requirements for the marketing system when export prices are volatile.

Market sentiment has shifted repeatedly over the past two weeks. Cocoa futures rallied strongly from late May through August as traders focused on disease risks, crop quality and the possibility that El Niño-related weather could reduce output across West Africa. Prices then came under pressure as expectations for available supplies improved.

COCOBOD has estimated Ghana’s 2026/27 crop at about 650,000 tonnes following field surveys of pod counts, below an earlier figure of roughly 750,000 tonnes. The downgrade has provided underlying support to futures because Ghana’s harvest is a major component of global supply.

Conditions in Côte d’Ivoire have also remained central to the market outlook. The country’s cocoa regulator has indicated that production in the year to June reached about 2.06 million tonnes, up from roughly 1.58 million tonnes a year earlier, helping to ease some fears of an immediate shortage.

Traders are nevertheless monitoring crop quality as well as volume. Excessive moisture can encourage black pod disease, while inadequate sunshine can hinder bean development, leaving futures sensitive to shifts in West African weather forecasts during the early stages of the main-crop harvest.

Cocoa processors have also pointed to improved availability compared with the severe shortages that drove prices to record levels during the 2023/24 season. Barry Callebaut, the world’s largest cocoa processor, said the market was better supplied and better positioned to manage weather-related risks than during that period.