Cocoa Price Trend and Forecast

Cocoa Regional Price Overview

Get the latest insights on price movement and trend analysis of Cocoa in different regions across the world (Asia, Europe, North America, Latin America, and the Middle East & Africa).

Cocoa Price Trend for the Q2 of 2024

During Q2 2024, cocoa prices remained elevated, reflecting ongoing challenges in the global supply chain and the impact of adverse weather conditions. The upward trend in prices, which began in mid-2022, continued into the quarter, driven by persistent supply constraints and rising production costs. Despite a slight correction in May from record highs reached in April, overall market sentiment remained bullish, with prices expected to stay high throughout the year.
 

Cocoa Price Chart

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The cocoa market faced significant supply disruptions, particularly from West Africa, which accounts for the majority of global production. Adverse weather conditions, notably the lingering effects of El Niño, led to drought stress in key producing regions like Ghana and Côte d’Ivoire, severely impacting cocoa yields. Additionally, labor shortages in the trade and logistics sectors exacerbated supply chain issues, driving up global freight costs and adding further pressure to cocoa prices.

In Ghana, one of the leading cocoa producers, production was notably below expectations due to these adverse conditions, contributing to the global supply shortfall. The country also faced challenges from illegal mining activities, which reduced the land available for cocoa cultivation. Meanwhile, other regions, including Nigeria, experienced significant declines in cocoa exports, further tightening global supply.

The industry also faced rising costs related to input and labor. Fertilizer shortages, driven by disruptions in the global supply chain due to the Russia-Ukraine conflict, increased production costs, affecting the quality and quantity of cocoa beans. Rising labor costs, particularly in Ghana, also contributed to the overall increase in production expenses.

Demand dynamics further supported high cocoa prices. The global market saw a growing appetite for specialty and premium chocolates, with significant innovation in product development driving up the demand for high-quality cocoa beans. This increase in demand, coupled with the constrained supply, created an environment where prices were likely to remain elevated.

Overall, the cocoa market in Q2 2024 was characterized by tight supply conditions, high production costs, and robust demand, all of which contributed to sustaining elevated price levels.

Analyst Insight

According to Procurement Resource, the price of Cocoa is expected to remain challenging, with industry players navigating a complex landscape shaped by environmental, economic, and logistical factors. As the industry faced a potential supply deficit for the third consecutive year, the pressure on cocoa prices showed little sign of easing in the near term.
 

Cocoa Price Trend for the Q1 of 2024

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The global cocoa market was struggling with its most severe supply deficit in over six decades, primarily due to environmental disruptions, diseases, and aging trees in West Africa, which produces around 60% of the world's cocoa. The result of this supply disruption was evident in the 19% surge in global cocoa prices from an average of 4415 USD/MT in January to 5288 USD/MT in March.

The International Cocoa Organization forecasts an 11% drop in global cocoa production for the 2023/24 season, leading to a significant supply-demand mismatch and driving up prices of cocoa. The ICCO's first forecasts for the 2023/24 cocoa year indicate a supply drop to 4.449 million tonnes and a demand reduction to 4.779 million tonnes.

Further, El Niño weather conditions worsened the situation, causing unseasonal heavy rains followed by dry heat, particularly affecting the Ivory Coast and Ghana. Major cocoa-producing countries experienced significant drops in output, with Ghana revising its production estimates to a 14-year low. Additionally, farmers also struggled with reduced yields due to black pod disease, swollen shoot virus, and trees that exceeded their optimal yield potential.

The financial strain on farmers was further compounded by fixed pricing policies that limit their ability to benefit from rising market prices. In response to these market dynamics, commercial buyers started to secure available cocoa, further pressuring the market. Overall, this supply shortfall is causing higher global prices, increased unit costs, and potential disruptions for processors.

Analyst Insight

According to Procurement Resource, the price of Cocoa is estimated to escalate. The market is expected to remain under significant pressure, with elevated prices likely to persist throughout 2024 due to the ongoing environmental and systemic challenges facing cocoa production.

Procurement Resource provides latest prices of Cocoa. Each price database is tied to a user-friendly graphing tool dating back to 2014, which provides a range of functionalities: configuration of price series over user defined time period; comparison of product movements across countries; customisation of price currencies and unit; extraction of price data as excel files to be used offline.