Cocoa Prices Soar Amidst Production Decline in Major Growing Nations

The global cocoa market is experiencing a significant surge in prices, driven by a substantial decline in production from the top two cocoa-producing countries, Côte d'Ivoire and Ghana. According to the International Cocoa Organization's (ICCO) latest monthly report, prices have skyrocketed by 47% in London and 44% in New York since the beginning of March.

The current market deficit is primarily attributed to a 467,000-tonne and 448,000-tonne decrease in production from Côte d'Ivoire and Ghana, respectively, over the past three seasons. The ICCO's analysis suggests that Ghana's production shortfall may be structural in nature, with a long-term negative trend observed since 2016/17.

This decline is attributed to a combination of factors, including the prevalence of the deadly swollen shoot virus disease, illegal mining reducing cocoa farms, aging trees, and unfavorable weather conditions. While Côte d'Ivoire's production shortfall appears to be an isolated short-term event, concerns remain about the long-term impact of cocoa tree aging.

The time lag associated with cocoa tree cultivation poses a challenge to the market's ability to respond quickly to price increases. New trees can take up to three to four years to begin producing beans and reach maximum yield after ten years.

The ICCO notes that while price adjustments are expected once new grindings data and pod-counting surveys are released, it is difficult to predict when the market will reach equilibrium. These data will provide an initial estimate of the market balance for the 2024/25 year.