Cocoa - Foresight CSI

1 Cocoa Prepared by Foresight September 5, 2018 TABLES Cocoa Bean Price Forecast .. P. 4 World Cocoa Supply/Demand, Crop Year .. P. 7 World Cocoa Production .. P. 8 Cocoa Crops in Major Producing Countries .. P. 9 World Grindings of Raw Cocoa .. P. 12 Quarterly Cocoa Grind for Major Countries .. P. 17 Cocoa Bean Prices: Average Daily Nearby Futures Closes .. P. 18 10/12 % Natural Cocoa Powder Prices, NYC .. P. 20 Ratio of 10/12% Natural Cocoa Powder Prices to Cocoa Bean Prices .. P. 22 Cocoa Butter Prices .. P. 24 Ratio of Cocoa Butter Prices to Cocoa Bean Prices.

2 P. 26 CHARTS December 2018 Cocoa Futures .. P. 5 March 2019 Cocoa Futures .. P. 6 World Cocoa Production .. P. 10 World Cocoa Production--Four Largest Countries .. P. 11 World Cocoa Grind .. P. 13 World Cocoa Production, Grind, & Stock Changes .. P. 14 World Cocoa Carryover Stocks .. P. 15 World Cocoa Stocks-to-Grind Ratio .. P. 16 Cocoa Bean Prices (Nearby Futures) .. P. 19 10/12 % Natural Cocoa Powder Prices .. P. 21 Cocoa Powder to Bean Ratio .. P. 23 Cocoa Butter Prices .. P. 25 Cocoa Butter to Bean Ratio .. P. 27 PREPARED BY PAUL J. MEYERS WITH ASSISTANCE FROM RAE GILLETT 200 EAST 5th AVE SUITE 109, NAPERVILLE, ILLINOIS 60563 VA: (540) 450-8054 NAPERVILLE, IL: (630) 210-7475 FAX: (630) 579-9123 Cocoa Supply Demand Outlook and Strategy Update Futures Price Update: December futures prices increased to around $2305 a tonne in early September, $135 above a month ago, and $360 above a year ago.

3 December futures prices have ranged from $2100-2397 a tonne in the past month. Key Supply Demand Factors: The International Cocoa Organization last week estimated the 2017/18 global Cocoa surplus at 31 thousand tonnes compared with a previous estimate for a 10 thousand tonne surplus. Cocoa arrivals at ports in top grower Ivory Coast were seen at around 1,842 thousand tonnes by September 2, down from 1,995 thousand in the same period last season, exporters estimated. The main Cocoa harvest has begun in a number of Cocoa -producing states in Nigeria as rainfall persists, industry officials and traders said.

4 Poor liquidity within Ivory Coast's banking system risks hindering exports at the start of the upcoming main crop, exporters and bank officials said. Cameroon exporters and farmers are fleeing a crisis in the Anglophone region, industry officials said. Summary of Key Factors: The International Cocoa Organization (ICCO) last week raised its forecast for the size of a global Cocoa surplus in the 2017/18 season, citing higher production than previously expected. The ICCO estimated the 2017/18 (Oct-Sep) global Cocoa surplus at 31 thousand tonnes, up from a previous estimate at the end of May for a 10 thousand tonne surplus.

5 The ICCO raised its estimate of 2017/18 global Cocoa production by 58 thousand tonnes to 4,645 thousand due to upward adjustments for Brazil, Ghana, Ecuador, and Nigeria. Ghana's Cocoa production was forecast at 900 thousand tonnes, up from a previous forecast of 880 thousand. Favorable weather conditions, improved farming techniques, and good husbandry practices boosted the country's Cocoa production. The ICCO maintained its Ivory Coast 2017/18 Cocoa crop forecast at 2 million tonnes. Indonesia's Cocoa crop forecast was lowered to 240 thousand tonnes from a previous projection of 260 thousand with low Cocoa prices causing farmers to leave Cocoa production.

6 The ICCO raised its estimate of 2017/18 world Cocoa grindings to 4,568 thousand tonnes, 37 thousand above its previous forecast. 1 Cocoa arrivals at ports in Ivory Coast were seen at around 1,842 thousand tonnes between October 1 and September 2, down about 8 percent from 1,995 thousand in the same period last season, exporters estimated. In the week ending September 2, arrivals of 9 thousand tonnes were down from 12 thousand during the same week last season. Despite below average rainfall last week, a new wave of small Cocoa pods is growing on trees in Ivory Coast ahead of the October-to-March main crop harvest, farmers said.

7 They said the crop would be abundant until December and they expect to begin harvesting in around two weeks. In the western region of Soubre, in the heart of the Cocoa belt, farmers said the young pods had sufficient moisture to develop. In the center-western region of Daloa, which produces a quarter of Ivory Coast's output, farmers said they expected a large amount of Cocoa to be harvested between November and December. We estimate Ivory Coast's 2018/19 Cocoa main crop at 1,450 thousand tonnes, 75 thousand above a year earlier. The main Cocoa harvest has begun in a number of Cocoa -producing states in Nigeria as rainfall persists, industry officials and traders said.

8 The harvest is underway in Abia, Edo, Osun, and Ondo states amid incessant rainfall and cold weather that is making it difficult for farmers to sun-dry their Cocoa beans, according to officials. In Edo state, the largest Cocoa producer in the country's midwest region, the mold level in Cocoa is at 18 percent as a result of the rain, according to an official from the Cocoa Association of Nigeria. The acceptable level of mold is less than 3 percent. The president of the Association said last week that Nigeria's 2018/19 Cocoa production could be 2-5 percent below last season's 300 thousand tonnes due to heavy flooding, which has drowned Cocoa trees as well as disease outbreaks on Cocoa farms.

9 Black pod disease is damaging Cocoa pods, particularly in Cross River, the country's second largest Cocoa -producing state. Poor liquidity within Ivory Coast's banking system caused by the collapse of the country's largest exporter risks hindering exports at the start of the upcoming main crop, exporters and bank officials said. A sharp drop in world Cocoa prices in the middle of the 2016/17 season left many local exporters, who had speculated prices would rise, unable to execute their contracts and pay back bank loans. Ivory Coast's marketing board, the Coffee and Cocoa Council (CCC), reacted to last season's bank crisis with tightened regulations that have pushed many local exporters out of the sector.

10 The tougher regulations have also undermined the government's declared goal of fostering domestic participation in the sector. The CCC expects to issue 30 to 40 export licenses for the 2018/19 season, down from around 100 for the current season, a marketing board official said. Normally, banks over the next month would be releasing funds exporters could use to pre-finance the middlemen who purchase Ivory Coast's Cocoa production directly from farmers. However, exporters said they are already seeing that some banks are struggling. Cocoa firms operating in Cameroon have moved staff out of the Anglophone region of the country and farmers are abandoning their crops in the area as violence between separatists and security forces intensifies, exporters and farmers told Reuters.