African Cocoa Plants Run Out Of Beans As Global Chocolate Crisis Deepens
The global chocolate industry is in turmoil as major cocoa plants in Africa, the world’s top producers, are running out of beans, leading to a potential price surge for chocolate consumers worldwide.
What Happened: Major cocoa plants in Ivory Coast and Ghana have either halted or reduced processing due to an inability to afford bean purchases, Reuters reported. This development is expected to drive up chocolate prices globally.
The price of cocoa has more than doubled in the past year, reaching record highs. The shortage has disrupted the traditional global cocoa trade mechanism, causing local dealers to pay farmers a premium for beans. This has led to a breakdown in the system, with local processors struggling to secure beans.
As a result, chocolate manufacturers have increased prices. U.S. retail stores charged 11.6% more for chocolate products last year compared with 2022, according to data from market research firm Circana.
“We need massive demand destruction to catch up with the supply destruction,” Tropical Research Services’ Steve Wateridge, a world expert on cocoa, said.
The International Cocoa Organisation (ICCO) predicts a 10.9% global cocoa production decrease this season, with a 4.8% fall in grindings. This will result in a 374,000-ton deficit this season, up from 74,000 tons last season, according to the ICCO.
Why It Matters: The cocoa market has been under pressure for some time. In February, hedge funds piled into cocoa futures, driving prices to record highs. This was beneficial for speculative investors but detrimental to chocolate consumers and manufacturers.
The price of cocoa, a regulated commodity that trades on the Intercontinental Exchange (ICE) under the ticker CC, surged over 100% in February since the previous year, reaching over $5,500 per tonne. This led to an unprecedented increase in the cost of Valentine’s Day chocolate pralines.
In the same month, the price of cocoa doubled, reaching an all-time high. Extreme weather conditions in West Africa, the primary source of the world’s cocoa beans, led to crop disease, further exacerbating the shortage.
Image Via Unsplash
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Posted-In: Africa chocolate cocoa Ghana International Cocoa OrganisationNews Commodities General
