Cote d’Ivoire and Ghana, the world’s largest cocoa producers, have either halted or reduced processing in major plants due to soaring bean costs, leading to a global increase in chocolate prices, Reuters has reported.
The two West African nations, which together produce nearly 60% of the world’s cocoa, have been grappling with extreme weather changes and cocoa pod diseases for several months, according to a report by the African Export-Import Bank (Afreximbank) published on Tuesday.
Cocoa supplies from Cote d’Ivoire between October 2023 and February 2024 dropped by approximately 39% compared to the previous year, totaling 1.04 million metric tons, Afreximbank reported. Meanwhile, Ghana’s exports decreased by about 35% to 341,000 metric tons between September 2023 and January 2024.
Benchmark cocoa futures for March delivery on the Intercontinental Exchange (ICE) in New York surpassed $6,000 per metric ton last Friday before easing to around $5,880 per ton, still surpassing the previous record high of $5,379 set in 1977.
Industry analysts have warned that bean prices could continue to rise due to the global supply threat posed by the weather phenomenon El Nino, which caused droughts in West Africa in the third quarter of 2023 and is expected to persist until April.
“We need massive demand destruction to catch up with the supply destruction,” Reuters quoted Steve Wateridge, director of Tropical Research Services, as saying.
Transcao, a state-owned cocoa processor and one of Ivory Coast’s nine plants, has stated that it cannot afford to purchase beans at current prices and is relying on existing stock. Global trader Cargill has also faced challenges in sourcing beans for its major processing plant in Ivory Coast, leading to a shutdown of operations for about a week last month, according to anonymous sources cited by Reuters.
In Ghana, the world’s second-largest cocoa grower, the majority of its eight plants, including the state-owned Cocoa Processing Company (CPC), have repeatedly suspended operations for weeks since last October, as reported by the news agency. CPC has indicated that it is operating at only about 20% capacity due to the shortage.
Last week, Michele Buck, CEO of American candy giant Hershey and one of the world’s largest chocolate manufacturers, forecasted that “historic cocoa prices” would restrict earnings growth in 2024, potentially resulting in product price increases.