The cocoa market in 2024 has been characterized by extreme volatility, with prices soaring to record highs, followed by significant corrections. Despite these fluctuations, challenges persist, suggesting that the volatility may continue into the future.
Cocoa has outperformed other commodities this year, surpassing even Bitcoin’s remarkable rise. On December 18, 2024, U.S. cocoa futures reached an all-time high of $12,646 per metric tonne, a more than threefold increase from the start of the year. This surge was primarily driven by adverse weather conditions in West Africa, the world’s largest cocoa-producing region, which accounts for 70% of global supply.
Key cocoa producers, including Ivory Coast and Ghana, have grappled with droughts and inconsistent rainfall, resulting in the worst global cocoa supply deficit in 60 years. According to the International Cocoa Organization (ICCO), the global deficit for 2024 is estimated at 300,000 metric tonnes, highlighting the severity of the supply shock. The shortfall has been further compounded by aging cocoa trees, insufficient investments in farming infrastructure, and the ongoing effects of climate change. The production in West Africa fell to 4.1 million metric tonnes in 2024, down from 4.5 million in 2023, exacerbating the supply crunch.
On the demand side, global chocolate consumption has remained resilient, with robust demand in both emerging markets and developed economies. The ICCO has reported a widening gap between supply and demand, which has left chocolate manufacturers—including industry giants like Nestlé and Cadbury—facing tough decisions. Many have raised prices or altered recipes to manage the cost of the raw material. For instance, Cadbury Australia raised the price of its standard chocolate block to A$7, reflecting a broader global trend of price hikes across the industry. This has sparked concerns about affordability, especially during peak seasons like the holidays.
The role of climate change in the cocoa market has come into sharp focus this year. Erratic weather patterns have made cocoa farming increasingly unpredictable, and experts warn that the market could face recurring supply deficits if these patterns persist. The future stability of cocoa prices remains uncertain, as long-term challenges related to climate change, aging infrastructure, and unsustainable farming practices remain unresolved.
From January to April 2024, cocoa prices surged by 7,500 points, climbing from a low of $4,100 in January to a high of $11,700 in April. However, the market then experienced a correction, settling at the 61.8% Fibonacci retracement level. Throughout the year, cocoa’s price movements have reflected a delicate balance between supply disruptions, growing demand, and climate-induced uncertainties. Between April and November, prices consolidated within a narrow range before breaking through previous highs in December.
Looking to the future, the cocoa market is expected to face a challenging yet potentially rewarding year. The ICCO forecasts a slight recovery in global cocoa production by 2025, while demand continues its upward trajectory. In the short term, prices may stabilize as the market adjusts to recent volatility, but the long-term outlook will depend on addressing climate change, improving supply chain efficiency, and promoting sustainable cocoa production.
From a technical perspective, if the market mirrors the earlier rally of 7,500 points from recent lows around $6,200, bullish traders could target levels near $13,000. On the downside, key Fibonacci retracement levels indicate support at $11,330 (23.6%), $10,340 (38.2%), and $9,540 (50%).
While recent highs have been lucrative for investors, the persistent underlying challenges cast a shadow over the market’s future. As 2025 approaches, the cocoa market stands at a crossroads, with opportunities for innovation and sustainability on one side and the potential for continued volatility on the other. Whether you’re a trader, producer, or consumer, the evolving cocoa market remains one to watch closely.
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