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Global cocoa prices have continued to surge this week, reaching a year-long high of around $12,500 on Futures commodities markets, amid a supply chain suffering sustained production deficits, writes Neill Barston.
Observers across the industry have expressed concern at the latest hike in prices – which in purely nominal terms is even higher than that seen in April, though this does not represent a historic high.
As sector bodies including the International Cocoa Organisation (ICCO) have noted, compared to the dramatic peak seen during the 1970s of around $5,000 a tonne, those figures today would be equivalent to close-on $30,000 a tonne, illustrating that in real terms, the value of cocoa has not kept pace against its former values, meaning the majority of farmers are continuing to earn below poverty line wages of less than $2 a day.
Farmgate prices in Ivory Coast for instance are presently around £2.40 per kilo (and are set around a year in advance by the region’s governments’, which is significantly below what trading prices are now commanding on specialist commodities markets.
Notably, this year has seen sustained issues facing key growing regions of Ghana and Ivory Coast face up to climate change issues that have impacted crop performance, as well as farmers being unable to afford sufficient levels of fertilisers, as well as the cocoa stocks being in poor health due to the impact of diseases including swollen shoot virus.
Significantly, as previously reported, the ICCO released its latest revised estimates for the last two years of world production, grindings, and stocks of cocoa beans, revealing that volume supply has dropped 13% to 4.38 million tonnes globally in the past twelve months – which has kept prices high.
In its latest bulletin, the ICCO points out that both the 2022/23 and 2023/24 seasons were affected by supply challenges and ended with a supply deficit. World production of cocoa beans for the 2023/24 season ended with a significant reduction as challenging weather conditions, diseases and pests took a toll on the major producing countries in West Africa.
The organisation’s global figure of 4.382 million tonnes, global production of cocoa beans is now estimated to be 50,400 tonnes higher than the Secretariat’s earlier projection in the previous Bulletin. Cocoa grindings were also down 4.8% for this year, standing at 4.8 million tonnes, despite consumer demand for premium chocolate in particular, remaining especially buoyant.
While global grindings stood at an encouraging 4.816 million tonnes, for the 2023/24 season, cocoa bean shortage and high cocoa prices slowed down processing activities. Despite this, cocoa demand still outstripped supply, with major manufacturers’ offerings and artisan businesses enjoying notable success in the past year in spite of the elevated bean prices.
As Confectionery Production has reported, industry insiders have highlighted the issue within supply chains, with considerable concerns being raised across the industry.