Cocoa prices are falling. Currently, financial analysts expect this trend to continue. What price could the chocolate go to?
Cocoa prices are falling
Cocoa quotes are falling due to favorable weather conditions for cocoa harvests in West Africa. According to Rabobank, this year’s “historic rally” may have peaked. The most active cocoa contract on the New York Stock Exchange was down 2.5% on Friday, May 10, 2024, at US$8,482 a tonne.
Chocolate could get expensive
In mid-April, cocoa futures hit a record high of US$11,000 a tonne amid concerns about a supply shortage.
In this context, concerns are growing that the cocoa industry will not be able to obtain enough cocoa beans. Chocolate manufacturers could continue their policy of passing costs on to consumers or offer smaller chocolate bars or with less chocolate content. Although volatility remains high, trading in recent days has indicated a decline in prices following the gains of recent weeks.
Despite a rapid return to a normal price level, the peak period has been passed. A continuation of the decline in cocoa prices is anticipated.
“A combination of weak global demand and production levels, particularly from countries that do not have fixed farmgate prices, will help ease price uncertainties going forward. However, it is possible that cocoa prices will remain high in the coming years”, explained Rabobank analyst Paul Joules.
Traders are monitoring the crop situation in West Africa. There, poor harvests have caused a third annual supply shortfall. In the coming days, rain is forecast to occur in the countries of this region. Potential rains will support cocoa crops. It could improve soil moisture in some areas.
In March, several days of bad weather put a lid on production in Ivory Coast and Ghana. Many traders feared that cocoa production had entered a long-term crisis. As of April 20, 2024, futures have risen sharply, up about 70% since early March. For chocolate producers around the world, the crisis can no longer be contained. Some chocolate makers were forced to close factories in Malaysia, Germany and Chicago. Chocolate companies that have been caught on the wrong foot are being dragged into lawsuits. Lack of liquidity means the next stage of the market will be rocked by erratic price movements.
