The price of cocoa continues to rise non-stop in international markets. It does so more than any other commodity and does not appear to have found its ceiling yet, after surpassing $9,000 per ton for the first time in history. Holy Week is heading towards $10,000 at the start. Supply shortages are impacting the market, with chocolate makers scrambling to source more beans to avoid rising costs that reduce sales.
Contracts with delivery in one month have risen more than 50% this month alone and have already more than doubled so far this year. The future with delivery in May shot up more than 5% this Monday, above $9,400 and draws a vertical bullish line of 300% in just six months or 400% compared to the levels of 2023 at this time. Poor harvests due to bad weather and crop diseases in the large producing areas of West Africa, where most of the world’s cocoa is grown, have left the industry in a difficult situation, especially because there is no relief in production elsewhere.
Easter eggs, more expensive
The unparalleled rise has taken prices towards 10,000, a level that seemed unthinkable just a few months ago, and has even made cocoa more expensive than the reference industrial metal, copper. The advance of cocoa will be reflected in higher chocolate costs throughout the year. Easter eggs are already becoming 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 soften the blow.
Prices have continued to rise even though a technical indicator has been in overbought territory for much of the last few months. Cocoa in London also rose. “Chocolate could be even more expensive by Easter 2025, if cocoa tree diseases and inclement weather prolong the deficit amid high sugar prices,” Bloomberg Intelligence analyst Diana Gomes explained in A note last Friday.
Even speculators will withdraw
Although prices have increased significantly, speculators have actually been withdrawing from the market. Open interest in the futures market, the number of contracts outstanding, has declined from its peak in January, and fund managers have reduced their net bullish bets to a one-year low in the past week. This suggests that physical buyers may have played a key role in the price spike.
There is a risk that the supply situation will begin. New European Union rules aimed at preventing forest-destroying products from being sold in stores may make it even more difficult for major EU chocolate makers to secure supplies. Attention now turns to West Africa’s upcoming interim harvest, the smaller of the two annual harvests. The regulator of top producer Ivory Coast expects this to be reduced this season, Bloomberg reported earlier this month.
Traders noted on Monday that the market experienced some panic due to recent reports that certain cocoa production plants in Cote d’Ivoire and Ghana had stopped or reduced processing activities because they could not afford to buy beans, Reuters reports.
The latest data showed that Ivory Coast farmers shipped 1.22 million tonnes of cocoa to ports between October 1 and March 10, 29% less than the same period last year. Meanwhile, Ivory Coast’s cocoa regulator said it expects the country’s average harvest, which officially begins in April, to fall 33% year-on-year.
At the same time, the International Cocoa Organization (ICCO) projected on February 29 that the global cocoa deficit in 2023/24 would widen to 374 million tonnes from 74 billion in 2022/23, largely due to conditions unfavorable growth patterns and crop diseases. Compared to the 2022/23 season, global cocoa supply is expected to decrease by almost 11%, to 4.44 million tonnes. The organization predicts that global demand for cocoa will decrease by 5%, to 4.77 million tons.
