Why is the price of cocoa soaring?

On the eve of the Easter holidays and its traditional chocolate eggs, the price of cocoa is soaring on the international market. Prices have just exceeded $6,000 per tonne, the highest level since 1977.


Reading time: 2 min

L'"brown gold" Ivorian, cocoa beans left to dry in the sun (illustrative photo).  (PHILIPPE DESMAZES / AFP)

Since January last year, the price of cocoa has more than doubled on the benchmark wholesale markets in New York and London. Cocoa beans are affected by diseases caused by heavy rains in West Africa. The production does not tolerate excessive humidity and lack of sunshine. The drop in this production leads to a drop in supply and therefore an increase in the price of the product which becomes rarer.

Ivory Coast is by far the leading cocoa producing country in the world, followed by Ghana. Between them, they supply nearly 60% of the world’s bean production, and the losses caused by poor climatic conditions are very sensitive, even on a political level. A previous supply deficit, which had caused world prices to soar, benefiting traders – moreover in the midst of the Ivorian political crisis in 2010-2011 – had led to the death of 3,000 people in Côte d’Ivoire.

Increase in the price of chocolate products

As climate problems multiply in these countries, rapid improvement in the situation is uncertain. Producers and traders are worried about another year of insufficient production caused by the El Niño climatic phenomenon which clearly threatens crops in West Africa with hot and dry weather. This would weigh on the next harvest, increase the supply deficit on the international market and therefore cause a new surge in prices. With consequences that we can imagine on the price of all chocolate products made from cocoa.

The phenomenon will go much further than the Easter holidays, the price of our chocolate bars and other derived products is not about to drop. Especially since more and more American and British investment funds are fueling this volatility in the cocoa market with speculation. “Brown gold” has never lived up to its name better, but not for everyone: Ivorian and Ghanaian producers are still waiting to reap the fruits of this speculation, which is clearly a double whammy for them with bad weather.

source site-28