Prices of cocoa hit highest in 46 years on the Intercontinental Exchange in London, New York
WEST AFRICA – Prices of cocoa, the primary raw material used to make chocolate, have surged to the highest in 46 years on the Intercontinental Exchange in London as bad weather in West Africa continues to threaten production prospects.
Prices are rising in reaction to a tight market for cocoa beans, which are mainly produced in the Ivory Coast and Ghana, the biggest suppliers of the produce.
The benchmark September contract for cocoa in London gained more than 2% this week to 2,590 pounds per metric ton, the highest price since 1977 at 2,594 pounds.
Cocoa prices rose in New York as well. The September contract gained 2.7% to $3,348 a metric ton, its highest in 7-1/2 years.
In the 2021/2022 cocoa season, around 4.9 million tonnes of cocoa were produced worldwide. Côte d’Ivoire and Ghana are by far the two largest cocoa-growing countries, accounting for over 60 % of global cocoa production, followed by Ecuador with 7 %. In Asia, Indonesia is the largest producer country.
Data from the Swiss Platform for Sustainable Cocoa (SPSC) indicate that cocoa production has increased steadily over the past 40 years, with up to 95 % of cocoa beans traded on international commodity markets.
The cocoa market is volatile and subject to various trends and fluctuations. The ups and downs are triggered by, among other things, political uncertainties, weather-related production shortfalls, and overproduction in producing countries.
The International Cocoa Organization (ICCO) widened this month its forecast for a global deficit in cocoa supply from 60,000 metric tons previously to 142,000 metric tons.
“It is the second consecutive season with a supply deficit,” said Leonardo Rosseti, a cocoa analyst at broker StoneX.
He said that the stocks-to-use ratio, an indicator of cocoa availability in the market, is expected to fall to 32.2%, the lowest since the 1984/85 season.
Data from SPSC further shows that the last low in prices was reached in 2016/2017 when a bumper harvest caused prices to fall to their lowest level in ten years. Since then, prices have been rising steadily.
Meanwhile, above-average rains in Ivory Coast are causing flooding in some cocoa fields, potentially hurting the main crop that starts in October.
Rosseti said that the rains are also hurting the drying process for cocoa beans that have already been collected.
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