The price of cocoa beans increased by 255% in the last year

The futures price of cocoa beans has risen more than 150% on the New York market in the past three months, and from March 2023 to date, it has gained 255%, as a result of the decrease in global supply. Profile crops are affected by unfavorable weather conditions, such as prolonged drought and heavy rains, but also by diseases that cause cocoa trees to be cut down. It should be noted that newly planted trees need three to five years to produce cocoa, so the supply in the next 2-3 years will probably be lower than the average of the last 15-20 years, which will support the price advance cocoa beans.

An analysis carried out by the Anadolu news agency shows that the price of cocoa beans rose by more than 61% last year, becoming the raw material with the highest growth after uranium, also surpassing the price of copper this year, which is around 9,000 dollars per ton.

On Tuesday, the price of cocoa beans exceeded 10,000 dollars per ton for the first time. Yesterday, the quote for cocoa beans for May delivery was $9,592 a tonne on the US market at 08:42 local time, down 0.3% from the previous day. The maximum level reached on Tuesday was $10,080 a ton, but at the end of the trading session, the quote was $9,622 a ton.

Two months ago, cocoa beans were trading at less than $5,000 on the New York market, and a year ago they were trading below $3,000. London cocoa futures have doubled since early February and tripled from last year.

According to the analysis company GlobalData, the supply of cocoa will decrease by 8% in the 2023-2024 agricultural season, compared to the last 12 months, the main reason cited being the problems in the major producing countries - Ivory Coast and Ghana, which generate 60% of global production in profile. Cocoa factories in these countries decided to reduce or stop production because they could not cover the costs of the seeds.

A significantly lower cocoa harvest is expected in Ivory Coast, which provides 45% of the global cocoa supply. At the same time, the harvest in Nigeria is far below expectations.

• Casey Sprake, Anchor Capital: "The perfect storm for chocolate confectioners"

The current scenario is like a "perfect storm" for chocolate confectioners, analysts say, and the news is not good for chocolate lovers, especially since sugar prices are also high.

Casey Sprake, investment analyst at Anchor Capital, says, quoted by primediaplus.com: "The latest forecasts regarding the production of cocoa beans in the Ivory Coast in 2023-2024 have been reduced to 1.8 million tons, amount 24% lower than in 2022-2023".

Anchor Capital analyst says the big problem is the unsustainability of the industry as a whole, given that most of the world's cocoa beans come from just two core producers in West Africa, and now, with some extremely unfavorable weather conditions, supply is affected. "If we also take into account the problems related to the increase in the price of sugar, suddenly chocolate is much more expensive than it was a month ago".

Sprake notes that not only the consumer is affected by this scenario that threatens an entire supply chain: "The cocoa bean industry supports entire economies. We have knock-on effects even in the supply chain and local economies, as well as regional African economies."

As a result, forecasts show that chocolate lovers will be affected by the significant increase in prices worldwide. Chocolate manufacturers will pass on the higher prices they pay for cocoa beans to consumers either by raising prices or by reducing product sizes.

Zafer Ergezen, an expert in commodity markets, says as quoted by Anadolu: "When the production deficit is so large, prices will inevitably rise, which in this case may lead to the shrinking of chocolate products, rather than the increase the price, something already observed in some producers in Europe".

According to Anadolu, farmers in Ivory Coast and Ghana have yet to benefit from record cocoa bean prices, as both countries delivered more than half of their crop in the spring of 2023, when quotations were much lower.

• Paul Joules, Rabobank: "The world is facing the biggest cocoa supply shortage in the last 60 years"

The world is facing its biggest cocoa supply shortage in 60 years, and consumers could start to see the effect in late 2024 or early 2025, Rabobank analyst Paul Joules says.

The International Organization of Cocoa Producers has forecast a supply shortfall of 374,000 tonnes for the 2023-2024 season, up 405% from a shortfall of 74,000 tonnes the previous season.

"The worst is yet to come," warns Joules, noting that cocoa bean prices will remain high for some time because there are no simple solutions to the systemic problems facing the market.