AGI – A few days before Easter, cocoa prices reached new historic highs, exceeding 10,000 dollars per ton in New York, and then retreated slightly, driven by the shortage of supply due to bad harvests. The most-traded cocoa contract in New York for May delivery was trading at $9,666 at 6.10pm, having already breached the $10,000 per tonne barrier earlier in the European session. “A ton of cocoa now costs more than a ton of copper,” said Kathleen Brooks, an analyst at XBT.
Strong demand combined with a significant reduction in supply from West Africa, the world’s top cocoa-producing region, pushed prices to all-time highs in 2023. Since then, prices have continued to break record after record. The contract traded in New York has already seen the price more than double, with a 130% surge this year. In London, cocoa has also gained 135% since January, reaching a new all-time high of £8,682 a tonne.
The continued surge in prices is due to a combination of factors, not least the shortage of cocoa from West Africa. Ivory Coast and Ghana are by far the world’s leading producers of cocoa beans, providing nearly 60% of total production for the 2022/23 crop, according to estimates from the International Cocoa Organization (ICCO).
“Last year these countries experienced difficult climatic conditions, in particular intense heat, which had a negative impact on production,” explains Ole Hansen, analyst at Saxobank. Added to this was the El Nino climate phenomenon, which “caused heavy rains in December, damaging crops and favoring the spread of the black pod disease,” says John Plassard, an analyst at Mirabaud.
Finally, “the increase in the cost of pesticides and fertilizers has put a strain on farmers, who have had difficulty obtaining these essential products for crop maintenance”, adds Ole Hansen. As a result, diseases and adverse weather conditions have significantly reduced crop yields, putting a strain on the supply chain. Although it typically takes “between 6 and 12 months for these price increases to be reflected in the retail prices of products”, Ole Hansen believes that “consumers should expect an increase” in the price of chocolate. “Chocolate is the new luxury product (…) and we expect sweets prices to increase in response to this massive price increase,” agrees Kathleen Brooks. In early March, Swiss chocolate maker Lindt & Sprungli warned that its prices would rise again in 2024 and 2025, after rising by an average of around 10% in 2023.
