Africa—The global cocoa market is experiencing unprecedented turbulence as cocoa bean prices soar to historic highs, consequently prompting manufacturers to reduce cocoa consumption to mitigate financial strain.
This adjustment comes as rising cocoa bean prices have forced several major processing plants in Ivory Coast and Ghana, key cocoa-producing nations, to suspend operations.
Ivory Coast and Ghana collectively produce nearly 60% of the world’s cocoa, making their processing plant suspensions particularly significant in the global cocoa market.
The International Cocoa Organization has warned that the ongoing cocoa bean shortage, which has persisted for two consecutive years, is expected to persist into 2024.
“Compared to the 2022/23 season, global cocoa supply is anticipated to decline by almost 11% to 4.449 million tonnes. Global cocoa demand is projected to decrease by almost 5% to 4.779 million tonnes,” the organization stated.
The shortage can partly be blamed on the El Nino weather pattern that has led to reduced rainfall and drier conditions in West Africa, a situation that might soon be declared permanent according to Humza Hussain, a commodities analyst at TD Asset Management.
Compounding this issue are navigation challenges in the Red Sea, further exacerbating the supply constraints and contributing to the escalating cocoa prices.
According to recent reports, the exchange value of cocoa beans has surpassed US$8,000 per ton, marking a significant two-fold increase since the end of 2023.
In early February, the price of cocoa beans reached the US$5,000 per ton mark for the first time since 1977, quickly escalating to US$5,500 per ton in the following days.
During a recent auction on March 18, the cost soared to an astonishing US$8,380 per ton before slightly receding to US$8,310.
This price surge has pushed chocolate brands to consider raising products’ prices. In fact, two leadingpopular chocolate brands, Hershey and Cadbury, have already announced that they may increase prices on their products in an effort to cope with the changes.
Mondelēz International, the company behind Cadbury chocolates, announced the possibility of a similar price hike for its products in a fourth quarter earnings call in late January.
“Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business,” stated Michele Buck, Hershey’s president and CEO.
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