Cocoa crisis triggers historic price surge in New York

20-05-25

Cocoa prices in the New York market have seen a remarkable surge, reaching levels not witnessed in decades. This phenomenon is attributed to a combination of factors affecting production and exports from the world’s top cocoa producer, Ivory Coast.

From October 2023 to July 2024, cocoa exports from Ivory Coast have fallen by 29% compared to the same period the previous year, totaling 1.61 million metric tons. This sharp decline is due to adverse weather conditions, the spread of diseases such as swollen shoot virus, and government policies that have discouraged production. As a result, total production for the 2023/24 season is expected to fall by 21.5%, reaching its lowest level in eight years. (nasdaq.com)

The supply shortage has caused New York cocoa prices to skyrocket, hitting $10,782 per ton in June 2024—almost triple the average price from the previous year. This increase has triggered volatility in the futures markets, with a sharp drop in liquidity as traders are forced to scale back their positions due to rising margin requirements.

The situation has also impacted chocolate manufacturers. Companies like Barry Callebaut have reported declining sales volumes despite increased revenue, as the rising costs are passed on to consumers. In addition, some firms have begun reformulating their products, reducing cocoa content or using alternative ingredients to cope with the high prices. (ft.com; nasdaq.com)

In response to the crisis, the Côte d’Ivoire-Ghana Cocoa Initiative has stepped up efforts to stabilize the market and improve farmers’ incomes. However, critics argue that these measures are insufficient, and call for deeper structural reforms to ensure the long-term sustainability of the sector. (en.wikipedia.org)

As global demand for chocolate continues to rise, particularly in emerging markets, pressure on the cocoa supply chain is intensifying. The international community and industry stakeholders face the challenge of balancing profitability with sustainable practices that safeguard the future of cocoa production and the livelihoods of those who cultivate it.

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