Cocoa price per tonne has reached its highest level for 6 months, exceeding 10,000 USD/tonne.
An increase of 50% on the previous month!
In December 2024, cocoa prices rose by 50% compared with the previous month.
The price of a ton of cocoa beans reached its highest level for 6 months, exceeding US$ 10,000/ton.
Highly concentrated supply and growing demand
Four countries account for 75% of world production, mainly in West Africa. More specifically, Côte d’Ivoire and Ghana, which account for 58% of this production, have recently suffered from unfavorable weather conditions, resulting in a drop in production that is not covered by the other producing countries. World cocoa production is expected to reach 5 million tons in 2024/2025.
At the same time, global demand continues to grow, particularly in Europe and North America, which consume almost 50% of the world’s cocoa. Consumption is also growing in emerging markets – Asia, the Middle East and South America – despite rising prices. During the 2023/24 campaign, the supply deficit represented more than 400,000 tons. This deficit could continue to grow in 2025.
Industry concentration fuels inflationary pressures
The cocoa processing industry is dominated by Europe, particularly Germany and the Netherlands. Four companies control two-thirds of the world’s grinding capacity, and the same is true of the retail confectionery market. This concentration makes it difficult for new players to enter the market and reinforces the North-South divide in the value chain.
Cocoa prices are surging again after several months of declines on the markets. This rise, which stems from structural imbalances between supply and demand, is being accentuated over the festive period, with growing demand to honor existing contracts.
Simon Lacoume, sectorial analyst at Coface.
Rising prices fueled by supply shortages
Production shortfalls in Côte d’Ivoire and Ghana, combined with growing demand to honor existing contracts, are driving up prices. The structural imbalance between supply and demand suggests that, in the medium term, cocoa prices will stabilize at an equilibrium price much higher than in previous years, and very probably close to USD 10,000/ton. Prolonged supply tensions could also seriously affect the major chocolate manufacturers, who remain dependent on a few supplier countries. Industry consolidation has led to the formation of processing giants, whose investments only pay off when production capacity is fully utilized. Although a shortage of raw materials is considered a low probability risk, its potential impact on the industry could be profound.
-Coface.com
