Cocoa prices hit new all-time highs, surpassing $10,000 a tonne in New York on Tuesday, before falling slightly on supply shortages due to a poor harvest, AFP reported.

New York’s most-traded cocoa contract for May delivery was at $9,666 around 5:10 p.m. GMT (6:10 p.m. Paris), breaching the $10,000-a-tonne barrier at the start of the European session.

“A ton of cocoa is now worth more than a ton of copper,” said Kathleen Brooks, an analyst at XBT.

Sustained high demand, combined with a significant reduction in supply from West Africa, the world’s main cocoa-producing region, pushed prices to all-time highs in 2023. Since then, prices have continued to break record after record.

The most traded contract in New York has already doubled, rising 130% this year.

In London, cocoa has also risen 135% since January, hitting a new all-time high of £8,682 a tonne on Tuesday.

Bad crops…

The relentless rise in prices is the result of a combination of factors, not the least of which is the shortage of cocoa in West Africa.

Ivory Coast and Ghana are the world’s leading producers of cocoa beans. Together, they provided almost 60% of total production for the 2022/23 crop, according to estimates by the International Cocoa Organization (ICCO).

“Last year, these countries faced difficult weather conditions, especially intense heat, which had a negative impact on production,” explains Saxobank analyst Ole Hansen.

Added to that was the El Niño weather phenomenon, which “caused heavy rainfall in December that damaged crops and contributed to the spread of black pod disease,” says John Plassard, an analyst at Mirabaud.

Finally, “the ever-increasing cost of pesticides and fertilizers put financial pressure on farmers who had difficulty obtaining these essential elements to sustain their crops,” adds Ole Hansen.

As a result, disease and adverse weather conditions have significantly reduced yields, putting pressure on the supply chain.

And chocolate?

Although it usually takes “six to 12 months for such price increases to be reflected in the retail prices of the products”, Ole Hansen believes that “consumers should expect an increase” in the price of chocolate.

“Chocolate is the new luxury product, (…) and we expect candy prices to rise in response to this huge price increase,” agreed Kathleen Brooks.

In early March, Swiss chocolate maker Lindt & Sprüngli warned that its prices would rise again in 2024 and 2025 after rising by an average of about 10% in 2023.

“Consumers are likely to face a new wave of (…) inflation for certain products,” said Susannah Streeter of Hargreaves Lansdown, in an interview with AFP.

“Prices for pure chocolate products are likely to increase the most, while companies may promote other sweets mixed with other ingredients,” which are subject to less price growth than cocoa, the analyst continued.

According to him, “consumers have already shown some signs of a tendency to turn to cheaper alternatives”, that is, cheaper chocolate products, or simply to buy less.

photo: Yan Andreev | Dreamstime.com