The price of cocoa, a crucial raw material for chocolate production, has surged to its highest levels in over a decade. On Tuesday, cocoa prices reached a peak in New York, just weeks after hitting a 46-year high in London. This surge comes as traders and chocolate manufacturers grapple with limited supplies.
The benchmark cocoa contract at the Intercontinental Exchange in New York soared to $3,429 per metric ton during the trading session, marking the highest level since mid-March 2011. It eventually closed at $3,407, reflecting a 1.4% increase.
Cocoa has emerged as one of the hottest agricultural commodities, primarily due to a significant decrease in production in the western part of Africa, which serves as a major supplier of raw cocoa to chocolate makers worldwide. Additionally, concerns about potentially adverse weather conditions in the future have also contributed to the price surge.
Analysts have pointed out that regions like Ghana, Ivory Coast, Nigeria, and Cameroon are susceptible to drier-than-normal weather in the coming months due to the development of the El Niño pattern. As a result, the supply of cocoa from these regions may face further challenges, leading to the current price hike in the cocoa market.
“Cocoa production is usually weaker in an El Nino year. We don’t know how strong this current El Nino will be, but forecasters say it will probably be strong,” said Rabobank cocoa analyst Paul Joules.
“The 2023/24 mid crop could be affected, as well as the 2024/25 main crop,” he added, referring to the two annual cocoa crops African countries harvest.
The amount of cocoa arriving at ports to be exported in number one grower Ivory Coast is down 4% in the season compared with the previous year, exporters estimated on Monday, indicating smaller production.
London cocoa futures settled up 18 pounds, or 0.7%, at 2,532 pounds per metric ton.
Among other commodities, raw sugar settled up 0.3%, at 23.86 cents per pound, still trading in a recent narrow range, below the 11-year peak above 27 cents hit late in April.
Arabica coffee rose 0.3%, to $1.563 per pound, while robusta coffee settled down $20, or 0.8%, at $2,532 a metric ton.