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A view of cocoa pods growing on a tree in Ebebda on November 30, 2024. Cocoa is a significant export product for Cameroon.
The surge in cocoa prices has garnered significant attention this year, with analysts cautioning about persistent price volatility in the market.
As of Tuesday morning, cocoa futures for March delivery in New York rose by 1%, reaching $11,938 per metric ton, marking another all-time high.
This benchmark contract previously set an intraday record at $11,925 and has seen an increase of over 180% since the beginning of the year.
The heightened prices stem from ongoing worries regarding adverse weather patterns and supply constraints in West Africa, a region responsible for approximately 75% of the global cocoa supply.
Analysts at Dutch bank ING noted that a combination of continued tightness in cocoa and coffee markets, along with unpredictable weather, suggests that volatility in prices is anticipated to persist into the next year.
According to ING’s research, the international cocoa market is experiencing its most significant deficit in over six decades during the 2023-2024 marketing year, primarily due to crop failures in Ivory Coast and Ghana, the leading producers of cocoa worldwide, as reported by the International Cocoa Organization (ICCO).
A staff member prepares a selection of drinking chocolate for customers at Katherine Anne Confections, an artisanal chocolate shop and café in Chicago, Illinois, on February 02, 2024.
“While the outlook for the 2024/25 marketing year appears more optimistic, concerns about weather conditions in West Africa and their potential impact on production remain,” explained Warren Patterson, head of commodities strategy at ING, in a note released on December 11.
“Current forecasts suggest a slight increase in output from West Africa, which contributes over 70% to global cocoa production, but recent adverse weather presents risks to these projections,” he added.
Looking forward, Patterson indicated that cocoa prices are likely to remain at historically high levels next year to help temper demand.
‘One of the most thrilling commodities’
In a parallel trend, coffee prices have also surged in 2024, with some analysts suggesting that it may take several years for the market to stabilize.
Carlos Mera from Rabobank highlighted cocoa and coffee as notable commodities for professional traders right now.
“Cocoa is often seen as one of the more obscure commodities, so I wouldn’t recommend it to anyone unfamiliar with the market, but it certainly offers an exciting area for exploration,” Mera remarked during an appearance on CNBC’s “Squawk Box Europe” Tuesday.
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