Chocolate crunch

Cocoa prices have shot up 80% to about USD 4,500 per 1,000kg in the past 12 months. The commodity is a crucial ingredient for chocolate and about 70% of the world’s cocoa production is in just two countries: Cote d’Ivoire and Ghana. According to the International Cocoa Organization, prices have surged over concerns of tight supply from these two countries due to unseasonably heavy rains, which have prevented the drying process and caused several diseases. This year’s problems follow two years of supply shortages. This has spurred several large chocolate makers to increase prices which will most likely result in 5-20% higher chocolate prices for consumers. The good news is that the market expects cocoa prices to decline 15% by Q1 2025 as next year’s harvest might be better.

Source: Bloomberg, December 2023.