Cocoa market on the brink of big price surge

The outlook for cocoa prices suggests significant challenges ahead for chocolate makers. After peaking at $12,000 per tonne in April 2024, prices dropped to $7,000 by May, but this relief is expected to be short-lived due to persistent supply-demand deficits.

Global cocoa production fell 13% in the 2023-24 season, marking a 500,000-tonne shortfall, largely driven by poor harvests in Ivory Coast and Ghana, exacerbated by El Niño effects.

Structural challenges, including deforestation laws, fertilizer shortages, ageing tree stocks, and the cocoa swollen shoot virus (CSSV), are compounding the crisis. CSSV is now estimated to affect 67% of West African cocoa farms, with the potential to halve production in Ivory Coast over time.

Dwindling reserves and inelastic chocolate demand suggest sustained price increases, possibly reaching historic highs as supply headwinds persist.