Cocoa continued its upward trajectory – with gains exceeding $700 per tonne in just one day and surpassing $9,000 for the first time – as supply crisis hits the market and chocolate producers struggle to acquire beans.
Futures in New York rose for the fourth consecutive day, adding gains following information about financial difficulties in Ghana, the world’s second-largest producer.
The country is set to lose access to a significant financial mechanism as the cocoa cultivation crisis has left it with a small yield to secure funds.
Ghana’s Cocoa Board, the industry’s regulatory authority known as Cocobod, relies on foreign financing to pay cocoa farmers for their production.
Prices have surged by about 60% just this month and have already more than doubled this year.
Poor harvests due to adverse weather conditions and diseases in West African plantations, where most of the world’s cocoa is grown, and minimal signs of relief in production elsewhere have left the sector in a challenging position.
The rally pushed prices towards $10,000 – a level that seemed unthinkable just a few months ago – making cocoa even more expensive than industrial metal copper.
The rise in cocoa will impact the high cost of chocolate throughout the year. Easter eggs have already become more expensive due to last year’s price jump, and some manufacturers are reducing bar sizes or promoting varieties with different ingredients to soften the blow.
Futures rose by 7.9% and settled at $9,649 per metric tonne in New York. Prices continued to rise despite a technical indicator being in overbought territory for much of the last two months. Cocoa in London also saw an increase.
“Chocolate could be even more expensive at Easter 2025 if cocoa tree diseases and adverse weather conditions prolong the deficit amid high sugar prices,” Bloomberg Intelligence analyst Diana Gomes said on Friday.
While prices have skyrocketed, speculators have actually exited the market. Open interest – the number of outstanding contracts – has decreased from its high at the end of January, and fund managers have reduced their net long positions to a one-year low last week. This suggests that physical buyers may have played a crucial role in the price rally.
There is a risk that the supply situation may worsen. Upcoming European Union rules – aiming to stop products that destroy forests from being sold in stores – may make it even more challenging for top chocolate manufacturers in the Union to secure supplies.
Attention now turns to the upcoming mid-crop in West Africa, the smaller of the two annual harvests.
Ivory Coast’s regulatory authority, a leading producer, expects this to shrink this season, Bloomberg reported earlier this month.
