Cocoa tops commodities in 2024 with record gains, outpaces Bitcoin

Cocoa, the key ingredient of chocolate, has seen a vertical rally in 2024, becoming the best-performing commodity of the year with prices soaring to an all-time high of $12,500 per ton, marking a staggering 180% gain, which is even better than Bitcoin.

Why are cocoa prices rising?

The meteoric rise in cocoa prices has come on the back of several factors. For starters, adverse weather conditions in key producing nations such as Ivory Coast and Ghana—responsible for nearly 70% of global output—combined with disease concerns will limit overall production. On top of it, low global inventories, soaring cargo costs, and years of underinvestment in cocoa farming further exacerbated the supply crunch.

The 2023/24 cocoa season registered a supply deficit of 478,000 tons, the largest in over six decades. This marked the third consecutive year of deficits in the global cocoa market, intensifying pressure on supply chains.
The positive, however, is that analysts have forecast a potential surplus of over 150,000 tons in the 2024/25 season. This would offer some respite, but the key question is whether it can ease the tightness in the market or mitigate price volatility.

The impact on the chocolate industry

The soaring cost of cocoa has left a bitter aftertaste for the chocolate industry. Leading brands are grappling with rising input costs and are increasingly passing the burden onto consumers. Price hikes in chocolates, cakes, and cocoa-based beverages are becoming common. Moreover, brands are diversifying their product portfolios, pushing alternative flavours to counterbalance cocoa’s cost challenges.

The rally in cocoa prices highlights the vulnerabilities of agricultural commodities to climate and market dynamics, with stakeholders calling for higher investment in sustainable farming practices to ensure future supply stability.

Cocoa prices vs Bitcoin

Bitcoin has experienced a staggering surge of over 140% in 2024, hitting the $100K milestone and reaching $108,353 in early December. This rally was propelled by the launch of Bitcoin Spot Exchange Traded Funds (ETFs) in January and the reduced supply after the fourth halving event in April. The impressive rise above the $100K mark and surpassing a $2 trillion market capitalization has had a significant impact on Bitcoin and the entire cryptocurrency market.