The price of cocoa, a key ingredient in chocolate, has surged to unprecedented levels this year, raising alarms about potential price instability and market volatility.
On Tuesday, the New York Cocoa futures contract for March delivery climbed to as much as $11,938 per metric ton, marking a new record high. The price later slightly retreated, trading at $11,864 around 8:20 a.m. ET. The benchmark contract, which reached an all-time intraday peak of $11,925 in the previous session, has seen an eye-popping 180% increase year-to-date.
This sharp rise in cocoa prices is fueled by ongoing concerns over adverse weather conditions and a tightening supply in West Africa, which accounts for approximately 75% of global cocoa production.
Analysts at ING, a Dutch bank, warned that cocoa and coffee markets are likely to remain volatile through 2025. They pointed to supply shortages and weather uncertainties as significant contributors to the price swings.
The global cocoa market faced its largest deficit in more than six decades during the 2023-2024 marketing year, according to the International Cocoa Organization (ICCO). ING highlighted that crop failures in Ivory Coast and Ghana—two of the world’s largest cocoa producers—were primarily responsible for the shortfall.
Warren Patterson, ING’s head of commodities strategy, noted that while the 2024/2025 marketing year holds more promise, there are still concerns about weather patterns in West Africa and their potential impact on cocoa production.
“Forecasts suggest that West African output, which makes up more than 70% of global supply, will rise slightly, but there are risks due to recent poor weather,” Patterson said in a report published on December 11. He also stated that cocoa prices are expected to remain historically high in the coming year, primarily to manage demand.
Commodity Markets Remain Unpredictable
Cocoa is not alone in facing price surges. Coffee prices have also spiked in 2024, with analysts warning that it may take years for the market to stabilize.
Carlos Mera, an analyst at Rabobank, highlighted cocoa and coffee as commodities currently drawing significant attention from traders. However, he cautioned that the commodity markets remain “extremely volatile” and “very dangerous.”
“Cocoa is one of the more obscure commodities, so I wouldn’t recommend it to anyone unfamiliar with the market,” Mera said during an appearance on CNBC’s Squawk Box Europe. “But it certainly is one of the most exciting commodities to track right now.”
He also noted that coffee prices have reached their highest levels since 1977, with some contracts breaking historical records. Both cocoa and coffee are facing significant supply constraints, and the market dynamics remain highly unpredictable.
As cocoa prices continue to climb, experts suggest that consumers and traders alike should brace for continued volatility in the months ahead.
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