2024-03-26 17:13:03
The most traded cocoa contract in New York for delivery in May was priced at $9,666 around 5:10 p.m. GMT (6:10 p.m. in Paris), after having already crossed the $10,000 per tonne mark at the start of the European session.
“A ton of cocoa now costs more than a ton of copper,” underlines Kathleen Brooks, analyst at XBT.
The continued strong demand combined with the significant reduction in supply from West Africa, the main cocoa producing region in the world, propelled prices to their historic highs from 2023. Since then, prices have continued to break records after records.
The most traded contract in New York has already seen its price more than double, soaring by 130% this year.
Also in London, cocoa has risen 135% since January, pushing to a new all-time high on Tuesday of 8,682 pounds sterling per tonne.
Bad harvests
This relentless rise in prices can be explained by a combination of factors, notably the lack of cocoa from West Africa.
Ivory Coast and Ghana are by far the world’s leading producers of cocoa beans. Between them, they provided almost 60% of the total production for the 2022/23 harvest, according to estimates from the International Cocoa Organization (ICCO).
“Last year, these countries experienced difficult weather conditions, including intense heat, which had a negative impact on production,” explains Ole Hansen, analyst for Saxobank.
Added to this was the El Niño climatic phenomenon, which “caused heavy rains in December, which damaged crops and favored the spread of black pod disease,” says John Plassard, analyst at Mirabaud.
Finally, “the escalating costs of pesticides and fertilizers have imposed financial constraints on farmers, who have had difficulty obtaining these essential elements for maintaining crops,” adds Ole Hansen.
Diseases and difficult weather conditions have greatly reduced yields, putting a strain on the supply chain.
And the chocolate?
While it generally takes “between 6 and 12 months for such 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 the prices of sweet treats to increase in response to this massive price increase,” adds Kathleen Brooks.
Already at the beginning of March, the Swiss chocolatier Lindt & Sprüngli warned that its prices would increase again in 2024 and 2025, after having been raised by around 10% on average in 2023.
“Pure chocolate products will likely experience the largest price increases, while companies could promote other sweet treats mixed with other ingredients” subject to smaller increases than cocoa, continues the analyst.
According to her, “consumers have already shown some signs of a tendency to turn towards cheaper alternatives”, that is to say lower-end chocolate products, or simply to buy less in quantity.
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