In the 2020/2021 growing season, Ghana and Ivory Coast are predicted to have a 102,000 t surplus of cocoa due to a decrease in cocoa purchases from Europe and an overall dip in chocolate sales. The International Cocoa Organization (ICCO) expects the price of cocoa to fall in Q2 2021, a position not held by some future traders who are looking at it from pure trend analysis.

Ghana and Ivory Coast supply nearly 60 % of the world’s cocoa, and both countries have established a Living Income Differential in order to force corporations/buyers to pay a more equitable price for cocoa. Since demand has decreased and these two countries are demanding higher prices for their cocoa, large corporations may look to other ways to source the cocoa in order to bypass fair wage policies.

Some traders examining the forecast fundamentals, rather than trend analysis, agree that price pressure will apply because of the LID. It is not clear, however, where the chocolate companies would go to get a regular source of cheap cocoa if the underlying demand was there.