The price of cocoa on the global market has increased by nearly 120 percent over the past year. This is due to recurring droughts in West Africa and other impacts of climate change. As a result, we will have to pay significantly more for chocolate in the coming years than we do now. It is worth checking the labels, as manufacturers may change product recipes to use less expensive cocoa.
In recent days, the prices of cocoa have continued their upward trend, which started in the fall of 2022. By the end of September that year, the price of cocoa was close to $2200, and then it started to grow steadily. As alarming news about droughts in the areas where it is grown began to hit the market, the price rose even faster. This week it crossed the $6500 mark, although it has adjusted slightly since then. Currently, the price is around $6200 per ton. Cocoa prices have increased by 47 percent since the beginning of the year, and by 117 percent over the past year.
This year, much attention is being paid to the El Niño phenomenon. It is responsible for the problems in the cocoa market, with Côte d’Ivoire and Ghana being the main suppliers to the world markets. Weather changes, intensifying from January to March, lead to higher temperatures and changes in rainfall patterns. This reduces the area where cocoa can be grown and also reduces yields from existing plantations. It also leads to the more frequent appearance of pests and plant diseases. The drought in West Africa is not the only challenge facing cocoa farmers. Climate change will require them to change the location of their plantations, moving them to higher ground to provide a more favorable climate for cocoa trees. These measures will increase the production costs of cocoa, and prices are likely to remain high.
All of this will cause cocoa supply to be lower this year, affecting the price increase. It is also worth noting that global consumption is constantly increasing. There have even been reports that there may not be enough cocoa this year to fulfill all already agreed long-term contracts for the product. Prices are also on the rise due to the entry into the cocoa market of financial investors, whose goal is not to purchase cocoa itself, but to profit from its price increase.
Cocoa is one of the most commonly used commodities in the world. It is the basis of the global chocolate industry, and is also used in the food, cosmetic and pharmaceutical industries. It is estimated that by 2025, the value of the global chocolate market will exceed $67 billion. High cocoa prices pose a serious challenge for chocolate manufacturers – they will mean higher prices for cocoa products in stores, as well as possibly temporary reduction in manufacturers’ margins. In Poland, many people still remember “chocolate-like products”, which were produced in the PRL and made use of chocolate substitutes. Their production was linked to the ongoing shortage of this raw material, which could only be purchased for foreign currencies. Of course, there will be no return to such products, but it cannot be ruled out that, with such high prices of cocoa, manufacturers will try to change their recipes to ones containing less cocoa. Despite the current adjustment, it seems that cocoa prices will remain high, and we should gradually get used to higher prices of chocolate in stores.
This report was compiled by Paweł Majtkowski, an analyst at eToro in Poland.
