The global chocolate market is in crisis. A symptom of the malaise is the unbridled race in the price of cocoa which has almost tripled since the beginning of 2024, in less than four months: in London the prices have broken through the threshold of 10 thousand pounds (almost 12 thousand euros), while in New York they exceeded 11,500 dollars. In both cases it is an all-time high that signals the global shortage of cocoa and the hunger of processing companies to stock up on the last loads of cocoa remaining on the market.
Supply difficulties in Europe
Data on cocoa grinding in Europe, home to the largest processing companies and the main market for chocolate, has exacerbated the already very high tension on prices. According to the Europe Cocoa Association, between January and March the quantity of ground cocoa beans fell by 2.5%: not because there is less demand for chocolate, but because there is not enough raw material to process. Furthermore, 2024 is the third consecutive year of disappointing harvests and, therefore, stocks are also now running out.
The role of climate change
The cocoa crisis in fact originates from the terrible harvests in Ivory Coast and Ghana, caused by climate change and the record heat brought by El Nino. Since the two countries are responsible for two-thirds of the world’s supplies, the famine had an immediate impact on price developments. Artificial, i.e. speculative, pressures were soon added to the “natural” pressures. Hedge funds have begun to bet on rising prices, grabbing contracts for the future delivery of cocoa and then selling them at a higher price to intermediaries and chocolatier companies.
However, the financial maneuvers have a marginal impact on the cost of cocoa which is due on the one hand to natural factors and on the other to years of low prices which have led to a reduction in the area cultivated with cocoa. In the medium term, therefore, the record prices should bring the market to a new point of equilibrium, convincing a greater number of farmers in Africa to return to dedicating their lands to cocoa cultivation. The governments of Ghana and Ivory Coast have already raised the reference price of crops in view of the next season starting in October. However, the decision will not have immediate effects because the growth of the plants takes between three and five years. Climate change permitting.
