The price of cocoa, a critical raw material for chocolate production, reached its highest point in over 12 years on the New York Intercontinental Exchange. Climbing to $3,429 per metric ton during the trading session, cocoa prices settled at $3,407, marking a 1.4% increase. This surge follows a recent peak in London, where prices reached their highest in 46 years.
The soaring prices of cocoa can be attributed to the current scarcity of supply, particularly from West Africa, which is a major source of cocoa for chocolate makers worldwide. The region is experiencing an unusual decline in cocoa production, raising concerns among traders and chocolate producers. Adding to the uncertainties are worries about potentially negative weather conditions in the near future.
Analysts have singled out areas such as Ghana, Ivory Coast, Nigeria, and Cameroon as potential victims of drier-than-normal weather due to the developing El Nino pattern. In general, cocoa production tends to be weaker in El Nino years, and the strength of the current El Nino remains uncertain. Rabobank cocoa analyst Paul Joules points out that both the 2023/24 mid-crop and the 2024/25 main crop could be affected by these weather conditions.
In the number one cocoa producer, Ivory Coast, the amount of cocoa arriving at ports for export is estimated to be 4% lower compared to the previous year, signaling a decrease in production.
The bullish trend in cocoa prices is part of a broader rise in agricultural commodities. The scarcity of cocoa has put it in high demand, leading to an increase in prices. Moreover, other commodities such as raw sugar and Arabica coffee have also experienced price hikes.
Despite the recent surge in cocoa prices, traders and chocolate producers remain cautious as they face uncertainties surrounding supply and weather conditions. As cocoa continues to be one of the hottest agricultural commodities, stakeholders in the industry will closely monitor developments in West Africa and the potential impact on future cocoa crops
