Cocoa futures have surged by 16% in November 2024, bringing year-to-date gains to over 100%, as supply shortages and adverse weather in major producing regions collide with rising global demand for chocolate.
The market’s volatility reflects an increasingly fragile balance between supply and demand, with prices now exceeding $8,390 per tonne, doubling from earlier this year.
The State of the Cocoa Market
Cocoa is a critical commodity for the global chocolate industry, it experienced an unprecedented price hikes this year. Starting 2024 at around $4,000 per tonne, prices have risen sharply, fueled by unfavorable weather conditions in Ivory Coast and Ghana, which together produce 60% of the world’s cocoa. Compounded by increasing demand for premium chocolate products, this price escalation underscores the fragile state of the cocoa supply chain.
Adverse weather has wreaked havoc on cocoa harvests in West Africa. Ivory Coast, the world’s largest cocoa producer, has seen heavy rains and seasonal winds severely disrupt the harvesting and drying processes. Reports from the region show cocoa bean arrivals at ports plummeted, with 13,000 tons recorded between October 1 and October 6, 2024, compared to 50,000 tons during the same period in 2023.
The situation in Ghana mirrors these challenges, as farmers grapple with rising input costs and unfavorable climatic conditions. These setbacks have left traders and manufacturers scrambling to secure sufficient supplies.
While supply falters, demand for chocolate is soaring. As global economies recover from the pandemic, consumer interest in premium chocolate products has rebounded. Major chocolate manufacturers are competing fiercely for high-quality cocoa to meet evolving consumer preferences, exacerbating the pressure on available stocks.
Rising Prices and Market Trends
The prices have been on an upward trajectory throughout 2024, fueled by compounding factors:
- Unfavorable Weather: Persistent climatic disruptions in West Africa have significantly reduced yields.
- Higher Farming Costs: Rising costs for inputs like fertilizers have added financial strain on producers.
- Speculative Trading: Fear of continued shortages has driven speculative trading, amplifying price volatility.
By March 2024, cocoa futures had already surged by 132%, setting a bullish tone for the market. The November spike underscores ongoing uncertainty as traders and stakeholders reassess the long-term outlook.
Industry and Analyst Reactions
The surge in prices has sent shockwaves through the industry. Analysts warn that persistent supply disruptions could keep prices elevated well into 2025. The Coffee and Cocoa Council (CCC) in Ivory Coast has raised concerns about delayed distribution of seed stocks, which may hinder recovery efforts.
“The supply situation is precarious, and with the Harmattan winds around the corner, there’s a risk that crop quality and volume could deteriorate further,” said a CCC representative.
Meanwhile, major chocolate brands are exploring strategies to secure future supplies, including investments in sustainable farming practices and alternative sourcing.
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