(Bloomberg) -- Cocoa buyers and processors meeting in Accra this week agreed to a floor price for beans of $2,600 per ton proposed by top producers Ivory Coast and Ghana, according to the head of Ghana’s cocoa regulator, Joseph Boahen Aidoo.

Key Insights:

  • The agreement, which follows two days of meetings in the Ghanaian capital, represents a step forward for cooperation efforts by Ivory Coast and Ghana. The countries are seeking to exert more influence over the market to ensure their farmers and economies derive more benefit from the industry.
  • It’s still not entirely clear how the process will work, and a technical meeting will be held in July in Ivory Coast to nail down the practicalities. Ghana will only sell cocoa for the 2020-21 season at the minimum price of $2,600 a ton, Boahen Aidoo said.
  • The countries will manage production and are working to boost cocoa demand to offset any "marginal" increase in output as a result of the floor price, Boahen Aidoo said in an interview. Together, Ivory Coast and Ghana account for about 60% of global cocoa supply. Carlos Mera, an analyst at Rabobank, said earlier that a $2,600 minimum price would probably result in overproduction.

Market Reaction

  • Cocoa extended gains in New York to the highest close in about a year.
  • The $2,600/ton floor price compares with $2,541 a ton for cocoa for September delivery Wednesday, and $2,574 for December 2020 contracts.

Read More:

  • Top Cocoa Growers Halt 2020 Sales Amid Minimum Price Talks
  • Why African Cocoa Growers Are Having an OPEC Moment: QuickTake

(Updates with price chart.)

--With assistance from Irene García Pérez and Isis Almeida.

To contact the reporter on this story: Ekow Dontoh in Accra at edontoh@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Liezel Hill, Paul Richardson

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