Since the end of 2023, the global cocoa market has been experiencing a phase of high volatility characterized by dramatic price fluctuations. In January 2023, a ton of cocoa was trading at $2,600. After continuous increases, cocoa started 2024 at $4,200 per ton, a 61.54% rise in one year. This was just the beginning: within a few weeks, cocoa prices reached an initial peak of $11,900 per ton in April 2024. As the main ingredient in chocolate, cocoa has increased by 357% in less than 24 months. Several significant variations occurred in the past, depending on harvests, speculation, and political instability in producing countries, but never on such a scale. Since then, cocoa has fluctuated between $6,700 and $12,900 per ton. Today, in February 2025, cocoa has reached $8,900, after a drop of more than 11% in a single day: this price volatility and these daily variations are unusual.
Three factors explain this increase: climate, production, and speculation. First, a poor harvest in West Africa, which accounts for approximately 70% of global production. Côte d'Ivoire and Ghana alone concentrate 60% of this. Cocoa prices are highly dependent on the production of these two countries and their political stability. Unfavorable climatic conditions – droughts, floods, and phenomena related to El Niño – have reduced harvested volumes. In Côte d'Ivoire, there has been a 25% decrease in production, exacerbated by the spread of diseases such as the cocoa swollen shoot virus. In Ghana, excessive rainfall and the development of mildew have led to a downward revision of production. These climatic hazards, combined with intensive agricultural practices over recent decades (monoculture, excessive pesticide use, deforestation, and non-renewal of aging cocoa trees), are permanently weakening the sector.
In addition to physical constraints, the cocoa market is heavily influenced by speculation on futures contracts traded in London and New York. These markets allow traders to hedge against volatility. Their profits depend notably on the "country differential" – the difference between the purchase price at origin in the country and the selling price on the market. Small farmers, unable to use such mechanisms, are directly affected by market fluctuations and do not fully benefit from price increases. Finally, the volatility is such that financial players have invested heavily in cocoa, amplifying price movements.
Meanwhile, demand remains strong and growing in chocolate-consuming countries, mainly in Europe and North America. An increase in demand and a decrease in production thus lead to a very significant price increase. Sector players, both industrial and artisanal, began passing on the price hike gradually from 2023. As the situation persists, price increases are expected to accelerate in 2025.
Looking ahead, two scenarios are possible. First scenario: continued high prices. Cocoa prices would remain high, a consequence of lasting climate change. This would mark the end of "cheap" cocoa. Second scenario: a return to (near) normalcy. Once the poor harvest has passed, the market would return to its usual cycle. Prices, which are currently encouraging producers to invest, plant, prune, and fertilize, could, after a phase of absorbing the deficit, collapse again.
This situation is unsustainable for any of the stakeholders, starting with the producing countries. The cocoa market is highly concentrated, with 5 companies purchasing 70% of the world's cocoa. The productive sector, on the other hand, is very fragmented: there are 5 million small producers with less than 10 hectares. Such prices are incompatible with current demand: a decrease in demand would correspond to an adjustment in production. This would be the end of many family farms unprepared for such changes, and thus a source of poverty and regional instability.
It is difficult to anticipate which scenario will materialize. The expected increase in production in other regions of the world (in Asia, Vietnam, South America, for example) could rebalance supply and secure supplies. The use of methods such as agroforestry allows farms to become sustainable. Demand, however, barring a sustained increase in prices, should not dry up: chocolate, the ultimate pleasure product, is among the foodstuffs least affected by sales declines during periods of inflation.
Sources
https://www.uncommoncacao.com/blogs/uncommon-cacao/what-is-going-on-with-cocoa-prices
https://agence-api.ouest-france.fr/article/crise-du-cacao-une-opportunite
Christophe Eberhart (LinkedIn)