The Price of Chocolate’s Key Ingredient Skyrockets
The price of chocolate’s key ingredient has skyrocketed this year, prompting analysts to issue fresh warnings about extreme price volatility.
Record High Prices
Cocoa futures for March delivery in New York traded 1% higher at $11,938 per metric ton, notching yet another record high. It has since pared some of those gains, trading at $11,864 at around 8:20 a.m. ET.
Supply Tightness and Adverse Weather Conditions
The benchmark contract, which hit an all-time intraday high of $11,925 in the previous session, is up over 180% year-to-date. The global cocoa market registered its largest deficit in over 60 years in the 2023-2024 marketing year, citing data from the International Cocoa Organization (ICCO).
Strategists’ Views
Strategists at Dutch bank ING said persistent tightness in cocoa and coffee markets, coupled with weather uncertainty, meant that prices were likely to remain volatile through next year. Warren Patterson, head of commodities strategy at ING, said, "While prospects for the 2024/25 marketing year are looking better, there are still concerns over weather developments in West Africa and what it could mean for output this season."
Commodity Markets Remain Volatile
Like cocoa, coffee prices have also soared in 2024, with analysts recently warning it could take years for one of the world’s most traded commodities to recover. Rabobank’s Carlos Mera singled out cocoa and coffee as commodities of interest to professional traders, although cautioned that commodity markets remain "very volatile" and "very dangerous."
Conclusion
The price of chocolate’s key ingredient has skyrocketed this year, prompting analysts to issue fresh warnings about extreme price volatility. The global cocoa market registered its largest deficit in over 60 years, and strategists expect prices to remain volatile through next year.
Frequently Asked Questions
Q: What is the current price of cocoa futures?
A: The current price of cocoa futures for March delivery in New York is $11,864 per metric ton.
Q: What is the reason for the price increase?
A: The price increase is due to supply tightness and adverse weather conditions in West Africa, home to around three-quarters of the world’s cocoa production.
Q: What is the forecast for cocoa prices next year?
A: Strategists expect prices to remain historically elevated next year, necessary to keep a lid on demand.
Q: Are there any other commodities experiencing price volatility?
A: Yes, coffee prices have also soared in 2024, with analysts warning it could take years for the commodity to recover.
