Cocoa Becomes Pricier Than Copper

Cocoa extends it’s surge, with prices surpassing $9,000 (€8,307) per ton for the first time ever, amidst a supply crunch gripping the market and chocolate makers grappling for beans.

Cocoa futures have surged by about 50% this month alone and have already more than doubled in value this year. The industry faces challenges due to poor harvests caused by adverse weather and crop diseases in West African cocoa-growing regions, which account for most of the world’s cocoa production.

Despite limited signs of production relief elsewhere, prices are heading towards $10,000 (€9,230) – a level that was once deemed unthinkable. Additionally, cocoa’s price has surpassed that of the bellwether industrial metal copper.
The increase in cocoa prices will result in higher chocolate costs throughout the year. Already, Easter eggs are becoming more expensive due to last year’s price hike, prompting some manufacturers to either reduce bar sizes or promote varieties with alternative ingredients to mitigate the impact. Cocoa futures surged by as much as 5.2% to $9,400 (€8,676) in New York.

Prices have continued to rise despite a technical indicator showing overbought conditions for much of the past couple of months. Cocoa prices in London also experienced an increase.

Bloomberg Intelligence analyst Diana Gomes cautioned that chocolate prices could climb even higher by Easter 2025 if cocoa-tree diseases and adverse weather conditions persist, exacerbating the supply deficit alongside elevated sugar prices.

While prices have surged, speculators have been exiting the market. Open interest, which measures the number of outstanding contracts, has declined from a peak in late January, and money managers have reduced their net-bullish bets to a one-year low in the latest week.

This suggests that physical buyers may have played a significant role in driving up prices.There is a concern that the supply situation could deteriorate further.
New European Union regulations, aimed at halting the sale of products that contribute to deforestation, could make it even more challenging for the top chocolate manufacturers in the bloc to secure cocoa supplies.Attention is now shifting to West Africa’s upcoming mid-crop, the smaller of the two annual harvests.

Ivory Coast, the largest cocoa producer, anticipates a reduction in this season’s mid-crop. Ghana, another major producer, is facing difficulties accessing a crucial funding facility due to a crisis in its cocoa crop, resulting in insufficient beans to secure the funds.

The cocoa harvest for 2023/24 is expected to total approximately 422,500 to 425,000 tons, significantly lower than the country’s initial forecast.

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