August 29, 2024 – New York, NY – Cocoa prices have surged dramatically in 2024, continuing a trend that shows little sign of abating before 2026, according to experts. This rise, driven by severe weather conditions and crop diseases in West Africa, has caused a significant supply shortage, which is expected to persist, weighing heavily on consumer-facing companies like Hershey’s.
The price of cocoa has risen by over 80% year-to-date, with futures contracts hovering just below $8,000 per ton—a stark increase from the long-term average of around $2,500 per ton. Despite some volatility in recent months, the market remains elevated, with future contracts for May 2025 still projected to be around $6,000 per ton. This suggests that the high prices are unlikely to ease before 2026.
The supply challenges are largely rooted in West Africa, the world’s largest cocoa-producing region. Farmers in this region have been hit hard by both disease and adverse weather conditions, which have severely affected crop yields. The situation is compounded by the fact that it takes time for farm gate prices to rise sufficiently to incentivize increased production. Even though global demand for cocoa remains robust, the supply side is struggling to keep up due to these persistent challenges.
To cope with these issues, farmers need better access to fertilizers and pesticides, which are crucial for combating the diseases affecting their crops. However, economic constraints and the relatively small size of many cocoa farms limit their ability to invest in these essential resources. Moreover, the weather remains a significant and unpredictable factor. The ongoing impact of climate change has led to a troubled growing season in the southern hemisphere, not only for cocoa but also for other crops like coffee, which have seen record-high prices.
The long-term outlook suggests that the cocoa market will continue to face tight supply conditions, keeping prices elevated. The dependency on West Africa’s production, coupled with the slow pace of recovery in crop yields, means that the market is unlikely to stabilize in the near term.
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As consumers brace for higher chocolate prices, companies and governments will need to find ways to support cocoa farmers more effectively. This includes providing better access to agricultural inputs and developing more resilient farming practices to withstand the increasingly volatile climate conditions.
In conclusion, while the global appetite for chocolate remains strong, the challenges on the supply side are substantial, and it may take until 2026 for the market to find some balance. Until then, both consumers and producers will have to navigate a market characterized by high prices and ongoing uncertainty.
