On Monday, March 25, world prices for cocoa beans again reached a historical high. During trading on the ICE exchange, the cost of 1 ton of raw materials rose by 7.9% and for the first time during the entire period of observation exceeded $9.6 thousand.
Since the beginning of 2024, cocoa on the international market has already more than doubled in price, and over the past 12 months prices have tripled. Experts explain the observed dynamics by the growing shortage of goods in the world.
Thus, according to the forecast of the International Cocoa Organization (ICCO), in the current agricultural season (started on October 1, 2023), global production of beans risks decreasing by almost 11% - to 4.45 million tons. As a result, the global shortage of these products may increase by five times compared to the previous season - up to 374 thousand tons.
“The first reason is a poor harvest in West Africa, which accounts for 60% of global cocoa production. Extreme rainfall and flooding in Côte d'Ivoire and Ghana (the largest producing countries -
RT
) led to low yields... Second, the problem of smuggling is acute in West Africa. For example, cocoa from Ghana is transported to the neighboring state of Togo to be sold at higher or unregulated prices,” according to a study by the Netherlands-based Rabobank.
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© Olesia Shadrina
In addition, according to the company, cocoa trees in Côte d'Ivoire are mostly old, and therefore less productive and more susceptible to various diseases. At the same time, many farmers are elderly and often have no one to pass on their skills to, since their children move to large cities, bank analysts say.
“It is worth noting that, unlike other agricultural crops, the production of cocoa beans is still in the hands of small farmers. They do not have the opportunity to invest as much money in production as large agricultural holdings can,” explained Lyudmila Rokotyanskaya, an expert on the BCS World of Investments stock market, in a conversation with RT.
Also, according to her, one of the drivers for increasing world prices for cocoa could be the adoption in the European Union of a new law on combating deforestation. As part of the initiative, large chocolate producers will now have to prove that the cocoa beans they purchase were not grown in deforested areas.
“Each batch of beans must now include the GPS coordinates of the farm where they were grown, and this information must be uploaded into a special EU database. The law has a transition period until the end of 2024. Probably, cocoa bean traders are trying to stock up on this product in advance, still according to the old rules,” added RT’s interlocutor.
In addition, geopolitical factors have a certain influence on the cost of cocoa today, economists say. In particular, we are talking about attacks by the Yemeni Houthis on ships in the Red Sea and the Gulf of Aden, which led to an increase in the cost of maritime cargo transportation.
“Recently, logistics have become more complicated and much more expensive due to rising world fuel prices and the situation in the Red Sea. Therefore, the cost of goods in the world is likely to grow throughout 2024,” Georgiy Ostapkovich, director of the Center for Market Research at the Institute of Statistical Research and Economics of Knowledge at the National Research University Higher School of Economics, suggested in a conversation with RT.
A further increase in prices for cocoa beans will increasingly increase the costs of confectionery factories for the purchase of raw materials and the production of sweets. In this regard, by the end of this year, chocolate in the world may rise in price by at least 40-80%, depending on the variety, says Freedom Finance Global analyst Vladimir Chernov.
“The problem is that the diversification of cocoa bean producers remains low: in addition to Ghana and Côte d'Ivoire, about 15% of production is concentrated in South America - Peru, Ecuador and Brazil. That is, the observed dynamics of prices for raw materials will affect all global chocolate producers,” Chernov explained.
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© sefa ozel
However, already in 2025, the situation on the world cocoa bean market may stabilize if weather conditions improve and the harvest in West Africa increases, Georgiy Ostapkovich does not rule out. Although, according to him, prices are unlikely to return to their starting positions, the cost of goods in the world will still decrease relative to current values. As the specialist noted, the market has already faced similar problems in the 1980s and 2000s.
Lyudmila Rokotyanskaya also noted that the agricultural industry is cyclical, so the rapid rise in price of cocoa beans may be followed by a reduction in price. According to RT's interlocutor, high prices will likely lead to an increase in the planting of new trees in Ghana and Côte d'Ivoire, and other countries, such as Brazil, Indonesia, Ecuador and Peru, may increase investment in the production of the product.
Chocolate stock
It is noteworthy that the current situation on the global cocoa market has not yet affected the cost of sweets in Russia. According to the Federal State Statistics Service, over the past year, chocolate candies in the country have risen in price by an average of 3.6-4.6%, and chocolate itself by only 0.4%.
“We have not yet seen a serious increase in prices, since manufacturers are working on previously accumulated reserves. However, in the premium segment the cost of sweets and chocolate will gradually increase and may increase by about 30-40%. This applies to products with a high content of cocoa and other additives. As for the mass segment, prices here may also rise, but not too much,” noted Georgy Ostapkovich.
According to him, companies will take measures to contain prices so as not to scare away the mass consumer and not collapse demand. In particular, while the global cost of cocoa remains high, manufacturers may slightly reduce packaging size or change product recipes. Lyudmila Rokotyanskaya shares a similar point of view.
“Most likely, businesses will reduce the amount of chocolate in their products. For example, we will see more bars and candies with various fillings: caramel, puffed rice, nuts, raisins, and so on. Cocoa butter, in turn, will be more often replaced with cheaper analogues, such as palm oil,” concluded Rokotyanskaya.