Cocoa’s most substantial annual gain in 15 years poses a challenge for chocolate consumers worldwide. The surge in cocoa prices is expected to have a more pronounced impact on shoppers in the coming year as chocolate manufacturers deplete stocks acquired at lower prices and face the full force of the rally.
White sugar futures have marked a fifth consecutive annual gain, contributing to inflation in the sweets aisle. Adverse weather conditions, including relentless rain and the onset of the annual harmattan, have hampered cocoa crops in West Africa, the world’s top-growing region.
The most active cocoa contract in London has surged by 70% this year, reaching £3,506 per ton—the largest annual gain since 2008.
The rally stands out, especially considering the downturn observed across other staple crops; the Bloomberg Agriculture Spot Index has experienced a 14% decline, the most significant in a decade.
Cocoa’s supply concentration, with Ivory Coast and Ghana contributing 60% of the output, leaves little room for alternative growers to bridge the gap. While some countries, like Brazil and Ecuador, aim to expand their production, the process of producing new tree-bearing pods takes several years.
Despite the potential impact of seasonal dusty winds on fieldwork progress, the weather pattern El Nino poses a risk of exacerbating the dry spell. While lower demand may temporarily alleviate prices, Rabobank anticipates London futures to remain above £3,000 per tonne until the second half of next year—a historically high level.
Furthermore, buyers in the European Union are preparing for new deforestation regulations that could increase costs throughout the cocoa supply chain. Cocoa futures in New York have risen by over 60% this year, heading for the most significant gain since 2001.