The global cocoa prices have soared to unprecedented levels for the ninth consecutive day, raising significant concerns among market traders about the possibility of continued supply shortages for the fourth consecutive season and beyond.
The sharp rise in cocoa prices rings alarm bells, with industry experts expressing concerns about potential regulatory challenges and the imminent impact on chocolate consumers.
Chocolate makers, including the American giant Hershey, are grappling with historic cocoa prices, impacting their profit growth and leading to a slowdown in demand for higher-priced products.
Last Thursday, Hershey Company, one of the leading chocolate companies, stated that it expects the increase in cocoa prices to limit its profit growth this year. The company has already depleted its stock of cheap beans, exacerbating pressure on its financial performance.
Paul Goul, an analyst at Rabobank, warned that “panic already exists in the market, but we could potentially move to even higher levels.” He emphasized the risks facing the upcoming season, highlighting that cocoa tree diseases in West Africa, the leading production region, have become more severe than in recent years.
Sources cited by Reuters indicate that the lack of effective treatment options leaves the industry facing a daunting task of cutting down affected trees and replanting them.
Cocoa futures surged in London to a record level of £4916 per metric ton (Associated Press).
Standard cocoa futures in London soared to a record level of £4916 per metric ton on Friday, marking a 2.1% increase to £4757 per ton at the close.
Prices have doubled since the beginning of last year. Similarly, in New York, standard cocoa futures on the Intercontinental Exchange rose to a new high of $6030 per ton on Friday, ending 1.4% higher at $5888 per ton, nearly double since the beginning of last year.
A recent Reuters survey projected a global cocoa deficit of 375,000 tons in the 2023-2024 season, surpassing the previous estimate from last August and representing the third consecutive deficit for the market. Despite the record high prices, cocoa sellers have largely withdrawn from the market, leading to ongoing liquidity challenges.
The situation in the cocoa market also affects other soft commodities, with raw sugar experiencing a slight increase of 0.2% to $24.02 per pound, while white sugar remained relatively stable at $665.50 per ton.
Arabica coffee prices rose by 5.65 cents, or 3%, to $1915 per pound, and Robusta coffee increased by 3.5% to $3217 per ton.
With cocoa prices continuing to soar to unprecedented levels, the industry is preparing for possible long-term consequences. Analysts closely monitor upcoming crop cycles in the second quarter to assess the severity of the situation and its impacts on future seasons.
