TMN - Cocoa

Cocoa Soars as the Market Braces for a Chocolate Crisis

On Friday, cocoa futures lifted to a seven-year high as excessive rainfall in West Africa devastated crop yields, causing a chocolate crisis.

US cocoa futures for May delivery rose 8.28% to $8,018.00 per metric ton (MT) on March 15. Furthermore, market analysts anticipate a 1.67% climb to $8,152.00 per MT on the coming trading day.

The sweet commodity posted a weekly gain of 14.59%, standing 215.00% higher year-over-year (YoY) than the same time last year. With chocolate demand vastly outweighing cocoa supply, trade watchers described it as the worst crisis in the global chocolate industry.

El Niño brought heavy rains to the Ivory Coast, Ghana, Cameroon, and Nigeria, which account for 75.00% of global supply. Moreover, extremely wet conditions propagated the spread of cacao illnesses like the black pod disease and the swollen shoot virus.

Port arrivals in Côte d’Ivoire, the world’s top cocoa producer, plunged to 1.22 MMT between October 01 and March 10. It indicated a 29.00% YoY decrease in the same period in the 2022/23 crop year, with the mid-crop expected to fall 33.00%.

The Ivory Coast government projected a 21.50% YoY slide for the current crop year ending September 30 to an 8-year low of 1.75 MMT. Unfavorable weather also impacted Cameroon and Nigeria in West Africa, as well as Ecuador and Brazil in Latin America.

Chocolate Crisis Worsens on Cocoa Bean Shortage

Commodity experts warned of a looming chocolate crisis last year as confection companies pass the higher cocoa costs to consumers. The average price of US retail chocolate jumped 11.60% YoY in 2023 compared to the previous year.

According to market specialists, chocolate makers do not purchase raw materials but instead buy processed ingredients from bean processing facilities. However, with bean prices growing to inaccessible levels, major processing plants in the Ivory Coast and Ghana have either shut down or reduced output.

As a result, farmers have nowhere to sell their beans, while sweets makers have nowhere to buy processed cocoa. Hence, the tight supply will force confection companies to hike prices or reduce product sizes, worsening the global chocolate crisis.

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