Since the beginning of 2020, world prices for cocoa beans have grown by 14% and in February they updated the maximum of the last four years. According to the ICE exchange, the peak value was reached on February 13, when the cost of one ton of raw materials rose to $ 2988. The last time a similar level could be observed in August 2016.
Now quotes are slightly adjusted and are close to $ 2870 per ton. However, analysts do not rule out another price increase in the near future.
“Typically, prices for cocoa beans are getting stronger amid a reduction in supply. It can arise in connection with various factors - from crop failure to lower investment in the industry, ”Anna Bodrova, senior analyst at Alpari Information and Analytical Center, told RT.
According to the International Cocoa Organization, last season, which ended on September 13, 2019, there was a shortage in the market. Thus, global demand for cocoa beans exceeded supply by 21 thousand tons, as a result of which prices began to rise.
Moreover, in the upcoming 2019/20 season, investors are wary of declining global cocoa production and even higher price increases. This situation is associated with a deterioration in crop forecasts in the main producing countries - Côte d'Ivoire and Ghana, said Mikhail Kogan, head of the analytical research department of the Higher School of Financial Management.
“If at the end of 2019, farmers in Ghana and Côte d'Ivoire, who account for 63% of the global supply, complained about plant diseases, now the long-term heat and drought have become a challenge for producers. This state of affairs can lead not only to a reduction in fees from cocoa plantations, but also to a deterioration in their quality, ”Kogan explained in an interview with RT.
According to the analyst, manufacturers are trying to compensate for the damage from the climate factor by increasing cash investments in the industry. Against the background of the expected growth in investment, production in Côte d'Ivoire may increase from 2.2 million tons this season to 2.25 million next year, and in Ghana - from 875 thousand tons to 905 thousand.
However, the resulting shortage in the cocoa market was not the only cause of price increases. According to Kogan, raw materials began to rise significantly after the authorities of Ghana and Côte d'Ivoire announced new measures to combat poverty.
According to the World Bank, 80% of farmers who grow cocoa beans earn less than $ 3 a day. In total, we are talking about 4 million people and their families. To equalize living standards in the fall of 2019, both African producing countries decided to introduce a premium of $ 400 in excess of the exchange price for each ton of cocoa produced.
According to Mikhail Kogan, the recent increase in the cost of cocoa beans can lead to a rise in the price of chocolate in the world. However, the final dynamics of the price of sweets will also depend on changes in the cost of a number of other ingredients, such as sugar or dried dairy products. About this RT said the Executive Director of the Association of Confectionery Enterprises "ASCOND" Vyacheslav Lashmankin.
“A confectionery product can include up to 300 ingredients. At the same time, the share of cocoa in the raw material cost of chocolate products can vary from 33% to 75% depending on the type of product and production formulation, ”Lashmankin explained.
It should be noted that the Ministry of Agriculture of the Russian Federation does not expect a significant increase in prices for confectionery products in Russia in 2020. This was announced in the department at the end of January. It is expected that a significant reduction in the price of sugar in the country will help offset the global rise in the cost of cocoa beans to Russian producers. This point of view in a conversation with RT was expressed by the managing partner of Agro and Food Communications agency Ilya Bereznyuk.
According to the ICE exchange, in recent years, market sugar prices in the world have been showing steady growth. At the same time, in Russia over the past year, wholesale prices of producers of goods in some regions fell by 45%. This is stated in the report of the "Center for Agricultural Analytics" under the Ministry of Agriculture of Russia.
“In addition to lower sugar prices, it is also worth considering another factor. Specifically in Russia, chocolate should contain at least 35% cocoa products. So, some manufacturers can replace the ingredients and use vegetable oils with a similar melting point instead of the expensive cocoa butter. Therefore, I do not think that the observed increase in world prices for cocoa beans will somehow critically affect the Russian confectionery industry, ”Bereznyuk concluded.