Cocoa prices have surged in 2024, outperforming all other major commodities, and the trend shows no signs of slowing down. Production challenges in West Africa—due to adverse weather conditions and crop disease—have created massive supply shortages, causing New York cocoa futures to nearly triple this year, reaching an all-time high of almost $13,000 per ton in December.
Many traders, burdened by the soaring costs of maintaining positions, exited the market, while chocolate makers initially refrained from hedging in hopes of lower prices. However, the supply constraints worsened, pushing prices higher and forcing chocolate manufacturers to lock in inventory at record highs.
Weather conditions and a crop disease have further exacerbated the situation, raising concerns of a fourth consecutive global cocoa deficit. This, combined with low liquidity and the exit of traders from short positions, has led to extreme price volatility.
Ivory Coast and Ghana, the world’s top cocoa producers, continue to struggle with fulfilling contracts from previous seasons. Shipments from Ivory Coast have increased by 33% compared to last season, but analysts caution that this figure is misleading due to the low base from the prior year.
Despite record-high raw cocoa prices, the increase in cocoa butter costs—a critical ingredient for chocolate—has been tempered by weakening demand. Analysts are closely watching cocoa grinding data, set to be released in early 2025, to gauge potential demand destruction.
As global stockpiles dwindle, the supply-demand imbalance is likely to persist, heightening the risk of further price spikes into 2025, especially if West Africa’s harvest continues to underperform
