The Price of Chocolate’s Key Ingredient Skyrockets
The price of chocolate’s key ingredient, cocoa, 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. The benchmark contract, which hit an all-time intraday high of $11,925 in the previous session, is up over 180% year-to-date.
Supply Tightness and Adverse Weather Conditions
The price surge comes amid renewed concerns about adverse weather conditions and supply tightness in West Africa, home to around three-quarters of the world’s cocoa production. 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.
Global Cocoa Market Deficit
The global cocoa market registered its largest deficit in over 60 years in the 2023-2024 marketing year, ING said in a research note, citing data from the International Cocoa Organization (ICCO). It attributed this shortfall to crop failures in Ivory Coast and Ghana, the world’s largest cocoa producers.
Weather Risks
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, said Warren Patterson, head of commodities strategy at ING. Forecasts currently show that West African output – which accounts for more than 70% of global output – will edge higher. However, there are risks to this due to recent poor weather.
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 is expected to remain volatile through next year, with prices likely to remain historically elevated.
Frequently Asked Questions
Q: What is the current price of cocoa?
A: The current price of cocoa is $11,864 per metric ton.
Q: What is driving the price surge?
A: The price surge is driven by adverse weather conditions and supply tightness in West Africa, home to around three-quarters of the world’s cocoa production.
Q: What is the outlook for the global cocoa market?
A: The global cocoa market is expected to remain volatile through next year, with prices likely to remain historically elevated.
Q: What are the risks to the global cocoa market?
A: The risks to the global cocoa market include weather developments in West Africa and potential crop failures in Ivory Coast and Ghana, the world’s largest cocoa producers.
