On World Chocolate Day, the poor may be deprived of the delicious taste!

United States – Cocoa prices are rising on world markets, but the rise is benefiting bean growers and manufacturers, speculators and chocolate makers to varying degrees.

Last March, prices rose to more than $10,000 a ton in New York as crops in West Africa suffered due to bad weather and diseases that wiped out old farms.

But prices have since come down from their peak, but they are still three times higher than last year.
The price of a metric ton in futures contracts reached $8,144 in the latest trading, with a daily decline of 8.55%.

big difference
In Ivory Coast and Ghana, the world’s largest cocoa producers, authorities set prices in October based on previous months.
But by the time the crops are “mostly already sold out.”
This limits the impact of cocoa price fluctuations, whether up or down, but the boom does not directly benefit small producers, whose earnings are usually limited to barely enough to survive.
Authorities raised the price of medium crops in April by 50% to between $2,300 and $2,500 per tonne, a modest increase compared to what farmers can receive on global exchanges.
In countries with less regulated rules, such as Cameroon, Nigeria, Ecuador and Brazil, farmers have benefited more from this trend.
These farmers were allowed to sell their grain to willing buyers at prices close to those paid in financial markets.
But this unregulated approach comes with risks. “The rise in prices has made production more attractive,” David Gonzalez, coordinator of Peru’s Coffee and Cocoa Chamber, was quoted by AFP as saying.
But the fear remains that cocoa production will be in surplus within 3 to 5 years, the time needed by farmers who hope to benefit from planting new trees, which will lower prices once more.

According to the World Cocoa Organization, the list of the largest producers in the world came as follows in the 2022/2023 season:
• Ivory Coast 2.24 million tons.
• Ghana 645 thousand tons.
• Ecuador 454 thousand tons.
• Cameroon 290 thousand tons.
• Nigeria 280 thousand tons.
• Brazil 220 thousand tons.
• Indonesia 180 thousand tons.

Seize the opportunity
Major cocoa derivatives manufacturers, who grind the beans into butter, beverages or powder, negotiate a large portion of their supplies in advance each year.
But some contracts were not fulfilled, forcing them to seek much-needed cocoa at high cost, and in some cases to cut production.
Smaller brokers may find it difficult to raise the funds needed to adjust to higher prices. However, there is a group of brokers who are happy to see higher prices.

varying opportunities
Cocoa prices are rising because supply is less than demand for the third year in a row, according to the International Cocoa Organization, and investment funds that have sensed the changing circumstances are counting on higher prices, and making profits in the process.
But since January, prices have become too volatile for even the most profit-hungry speculative funds.
Many investors have pulled out of the market entirely, with the volume of traded contracts falling from 334,000 in mid-January to 146,000 in April, according to Ole Hansen of Saxo Bank.
“Speculators cannot be held responsible for artificially inflating prices,” says Waterridge.
On the other hand, international trading brokers and chocolate makers tend to hedge once morest price reversals.
But following prices rose, many of them were forced to set aside more money to cover their potential losses.

chocolate makers
Given the time lag between cocoa harvest and the final product, the cost of chocolate on store shelves should theoretically not be high for the industry giants.
Nestlé CEO Ulf Schneider confirmed in April that his company was “largely covered” thanks to futures contracts for the rest of the year.
But over time, the rise in raw cocoa prices will eventually have an impact.
To avoid passing the cost on to consumers already hurt by high inflation, manufacturers can change their recipes, such as increasing the amount of hazelnuts in Nutella, for example, or reducing the serving size.
Even for artisan chocolate makers, the cost of raw cacao is only a small part of the final product.
“There is a huge margin” for chocolate bars, which has mitigated the impact of higher bean costs, said Sebastien Langlois, co-founder of the French cocoa company.
He added that his company, which sells organic and fair trade products, has not yet raised its prices.

Agencies