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Cocoa : Rising prices hustle the world market

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Cocoa : Rising prices hustle the world market

africa world cocoa price

Over the past six months, cocoa bean prices have soared to record levels, more than doubling since August 2023. This surge is primarily driven by adverse weather and fungal diseases that have slashed production in key West African countries, which supply nearly three-quarters of the world’s cocoa. In this Case Study, Capmad explores the current situation in the global cocoa market and its future outlook.

In response, cocoa producers are scrambling for alternative sources to meet their contracts, pushing futures prices up as well. On March 26, the May 2024 cocoa futures contract exceeded 9,600 USD per metric ton on the ICE exchange.

Both producers and consumers are feeling the strain. Small-scale African farmers are experiencing income declines due to production losses, while consumers in wealthier nations are facing higher retail prices for chocolate and related products. The pressing question now is how long these high prices will persist and what effects this inflation will have on daily life.

Identifying causes and finding solutions to the cocoa crisis

Ghana and Côte d’Ivoire, traditionally dominant in the global cocoa market with over 60 % of the world’s supply, are experiencing significantly lower harvests this season. Predictions of cocoa bean shortages, the key ingredient for chocolate, have driven cocoa prices in New York to unprecedented highs this year, with new records being set almost daily.

According to Reuters, farmers, experts, and industry professionals attribute this crisis to illegal gold mining, climate change, poor sector management, and the rapid spread of disease. Ghana’s cocoa marketing board, Cocobod, in its most dire assessment yet, estimates that 590,000 hectares (1.45 million acres) of plantations are infected with swollen shoot virus, which will ultimately destroy them.

The International Cocoa Organization (ICCO) forecasts that global production for 2023-2024 will drop by 11 % to 4.45 million tonnes. This is expected to create a market deficit of 374,000 tonnes by September 2024, a significant increase from the 74,000-tonne deficit in the 2022-2023 season.

The case of Ghana : Centralized cocoa policy to stabilize the market

Cocobod spokesman Fiifi Boafo says that when cocoa prices on the world market rise, it doesn’t immediately affect farmers’ pockets. « Rising prices on the international market is something we are passionate about, as it offers farmers opportunities to improve their incomes », he explained, adding that they negotiate « forward sales » with farmers.

However, Ghana’s policy of passing on cocoa selling prices means that farmers are dependent on government-agreed prices, with no say in the matter. Cocobod argues that this policy is designed to enable the government and cocoa farmers to have some collective control over the supply and demand mechanisms on the raw materials market. It guarantees future cocoa supplies to counter any risk of price volatility, while stabilizing the market.

Boafo recognizes that this policy of forward selling Ghanaian cocoa may not offer farmers the opportunity to reap the full benefits of their production. Given that prices are currently rising on the world market. However, he believes that Ghana’s policy also has its advantages, and that it has protected farmers in the past by establishing reliable tariffs for their crops.

Côte d’Ivoire : Cocoa producers demand higher purchase prices

Côte d’Ivoire’s main cocoa bean producer organizations (Synap CI and Anaproci) are demanding higher purchase prices from the authorities. Recently, Côte d’Ivoire’s Ministry of Agriculture, Rural Development and Food set the purchase price of cocoa beans at 1,500 FCFA (2.5 USD)/kg.

Producer organizations believe that these prices do not allow farmers to build up a sufficient safety margin in the event of crop loss. According to Anaproci director Coffey Kang, prices should be raised to 2,500 FCFA (4 USD)/kg.

Most of Côte d’Ivoire’s political parties are backing the move. For example, the representative of the Parti démocratique de Côte d’Ivoire, Simon Dojo, declared that « more than 80 % of our cocoa bean producers live below the poverty line, even though the country supplies 40 % of the world’s cocoa beans. »

Côte d’Ivoire’s example is followed by Ghana, the world’s second largest exporter of cocoa beans (2.2 million tonnes a year and 822 thousand tonnes respectively). Recently, Ghanaian President Nana Akufo-Addo ordered a 58.2 % increase in purchase prices, from 20,928 sedi (1,560 USD) to 33,120 sedi (2,460 USD) per tonne by the end of the 2023-2024 season. Ghana accounts for 15 % of the world’s cocoa bean production.

The case of Cameroon : Taking advantage of lower production by major producers to position yourself on the market

Cameroon’s Minister of Trade, Luc Magloire Mbarga Atangana, issued an official statement celebrating the exceptional success of the Cameroonian cocoa market. He attributed this success to favorable international market dynamics and continuous improvements in the quality of the country’s cocoa beans.

The consistent improvement in bean quality, coupled with the current favorable conditions in the Cameroonian cocoa sector, has led to rising producer prices for several months. This situation is influenced by planned production cuts in Côte d’Ivoire and Ghana, as well as the climatic challenges and aging plantations faced by the world’s leading producers.

Cameroonian growers are also benefiting from a collective sales strategy, which enhances their negotiating power with buyers. This method, which has driven up prices for Cameroon’s distinctive red-brown cocoa beans since the start of the 2023-2024 campaign, fosters competition among buyers, thus increasing producers’ earnings. However, this success has created tension between exporters tied to major international traders and local processors competing for the increasingly scarce beans.

Despite major purchases by exporters, Cameroon has welcomed three new local processing plants in less than three years, Atlantic Cocoa, Neo Industry, and Africa Processing with a combined capacity nearing 100,000 tonnes. Many operators are willing to raise their bids for beans to keep their factories, often idle due to raw material shortages, operational.

Why are cocoa prices rising?

The rise in cocoa prices is largely due to a shortage on the world cocoa market. Climate change-induced drought has ravaged crops in West Africa, which contribute around 80 % of the world’s cocoa production. According to the International Cocoa Organization, world cocoa supply is set to fall by almost 11 % in the 2023-2024 season.

Deep-rooted structural problems are also at play, including chronic under-investment in cocoa plantations. Today, this crop is still largely farmed by smallholders, many of whom struggle to earn a living and lack the means to reinvest in their land. As a result, yields are falling over time.

« Cocoa is a market where the farmer produces a very valuable commodity but receives only a very small share of the real value chain. As a result, replanting rates are very low and cocoa trees are aging », says Tracey Allen, agricultural commodities strategist at JP Morgan.

All this is compounded by investor speculation, which is driving up prices. « What was a structural problem on the supply side has been exacerbated by dry weather and a strong Harmattan [a season in West Africa]. This has now manifested itself in an investor-driven parabolic price movement, particularly over the last six weeks », adds Allen.

For example, non-commercial investors now hold over 60 % of total open interest in cocoa futures and options on the New York market. This is an all-time high. As a result, consumers are now scrambling to cover their futures needs when liquidity is limited.

Halting cocoa price inflation

To halt this trend, Côte d’Ivoire and Ghana have taken an unusual step to improve farmers’ living conditions. In both countries, cocoa buyers will have to pay an additional premium of 400 USD per metric tonne of cocoa beans purchased, to guarantee a minimum purchase rate in the event of a drop in cocoa market prices. This is known as the « vital income gap ».

However, a new study by the humanitarian organization Oxfam, published at the World Cocoa Conference, shows that this approach is not effective. In part, because of rising commodity prices. But it has also failed because traders also pay a negotiated premium for cocoa. This premium is based on qualities such as taste, fat content or bean size, the so-called « national differential ».

« At least, if the price on the world market reached a certain level where the farmer would still be comfortable enough to continue producing and the buyer could also afford to buy cocoa, we could maintain that », says Boafo.

The Oxfam study reveals that cocoa buyers simply narrowed the gaps between Côte d’Ivoire and Ghana after these countries introduced the USD 400 premium to support farmers.

How long will cocoa prices remain high?

Prices are expected to remain high well into 2024. If weather conditions and yields return to normal, prices should begin to stabilize with the upcoming harvest in the last quarter of 2024. Specialists forecast lower cocoa prices for the 12 months following the end of 2024, indicating a slow market recovery as production and stocks increase.

The key question is how much crop losses and diseases have affected the number of cocoa plants and trees. Significant tree losses could prolong the deficit and create a structural supply problem, leading to sustained high costs. Additionally, the production costs tied to addressing these sustainability concerns could alter the supply dynamics.


According to GlobalData, cocoa bean prices have surged by 166 % and 189 % on the New York and London futures markets, respectively, over the past 12 months. For the 2023-2024 season, global production is forecast at 4.5 million tonnes, down by 340,000 tonnes from the previous season.

The ongoing rise in cocoa prices, driven by supply shortages in West Africa, is expected to persist well into 2024. While consumers in developed countries are feeling the pinch from higher prices, small-scale African producers may not benefit due to limited production capacity.

Additionally, weather conditions and fungal diseases could be damaging existing trees, potentially causing further market disruption. Cocoa producers are exploring alternatives from regions like Indonesia and South America. Although there is hope for a market recovery in early 2025, traders, buyers, and manufacturers will closely monitor the next harvest cycle starting in October 2024.

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