Market News
Buyers of Nigeria`s 2023-24 Main Cocoa Could Face Money Problems - DOW JONES
By Obafemi Oredein
Special for Dow Jones Newswires
IBADAN, Nigeria -- Exporters and other buyers in Nigeria may find it difficult to raise funds to purchase the 2023-24 season's main cocoa, now selling at a high of 3.2 million naira ($4,178) a ton, traders said Thursday.
The prices of cocoa have been boosted by a weak naira currency and a shortage of beans. In June, the Central Bank of Nigeria allowed a free float of the national currency against the dollar and other global currencies and the depreciation of the naira has continued since then amid the shortage of dollars because of low sales from oil, the country`s major export.
Cocoa traded at between NGN1.8 million to NGN2 million a ton in most of the cocoa-producing states in Nigeria in January, said Tunji Akinbami, a trader.
He said a local trader or exporter wishing to buy 10 tons of cocoa would now look for at least NGN30 million or a little more, adding that it may be difficult to get such funding in the country's financial market.
"(The money) could be a challenge to the local trader or exporter in the new cocoa season especially when a high interest rate of more than 20% is demanded by financial institutions for borrowing," Akinbami said.
He said cocoa processors in Nigeria would also face problems because they may not have the funds to buy several tons of cocoa needed for regular processing.
"Traders and exporters who obtain overseas cocoa contracts may be in a better position as their funds to purchase cocoa in the domestic market are coming from abroad," said Biodun Oyetunde, another trader.
He said Nigeria's total cocoa production volume in the season would likely be purchased thanks to funds coming from abroad and the international cocoa firms operating in Nigeria.
"In spite of the high cost of cocoa, Nigeria will find buyers for all its crops in the new season because of its quality," Oyetunde said.
Nigerian cocoa "is highly desirable in the global market because of its excellent qualities such as good bean count, low mold, and strong aromatic and smooth flavor," said Adeola Adegoke, president of the Cocoa Farmers Association of Nigeria,
Marketing of the 2023-24 main cocoa is expected to begin in earnest next month when the dry season sets in and farmers have adequate sunshine to dry their beans properly.
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