Rising Cocoa Prices: Causes, Effects, and Future Outlook

2024-03-27 19:35:25

Several factors have driven prices to their all-time highs in 2023 and they have not stopped rising since.

Photo: UNODC

The cocoa contract for delivery in May has been breaking records. This was quoted at $9,931, following having surpassed the barrier of $10,000 per ton in New York on Tuesday, March 26, 2024.

The rise in cocoa prices will cause chocolate prices to rise throughout the year. Easter eggs are already more expensive due to last year’s price increase, and some manufacturers are reducing the size of bars or promoting varieties with other ingredients to minimize the impact.

🍫 Causes and effects of high prices

Cocoa prices had begun to rise in 2023, driven by supply deficit fears, but accelerated their dizzying rise in January 2024.

Demand for the product remains strong, while there is a reduction in supply from West Africa (the main cocoa producing region) due to poor harvests caused by weather and crop diseases. Added to this are the financing problems of Ghana, the second largest producer in the world.

The country has a crisis in its cocoa harvest that has left it without enough beans to guarantee the money. The Ghana Cocoa Board, the sector’s regulatory body known as Cocobod, relies on foreign funding to pay cocoa farmers for their beans.

All of these factors have driven prices to their all-time highs in 2023. Since then, prices have not stopped breaking records.

Few signs of easing production elsewhere have put the sector in a bind, although it favors producers.

The Minister of Agriculture, Jhenifer Mojica, spoke regarding this and celebrated the good news for Colombian cocoa farmers. Although she warned that “in every prosperity you have to save, then comes the fall in price.”

“This is the time to invest in renovation, in improving cocoa plantations, in improving irrigation, in improving productive infrastructure. Let’s make this bonanza an opportunity to improve cocoa,” the official recommended.

But on the industry side, Diana Gomes, an analyst at Bloomberg Intelligence, predicts that “chocolate might be even more expensive in Easter 2025, if diseases of cocoa trees and inclement weather prolong the deficit in the middle of high sugar prices.”

There is a risk that the situation will worsen. New European Union rules aimed at preventing forest-destroying products from being sold in stores may make supplying the bloc’s leading chocolatiers even more difficult.

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