According to analysts, it is likely that a third global shortage in cocoa supply will happen in this year’s harvest, starting in October.
Global cocoa prices have risen about 47% in the past year due to concerns about bad weather and diseases that may affect harvests in Cote d’Ivoire and Ghana, which account for two-thirds of the global cocoa supply.
Global cocoa is likely to be in short supply.
Analysts said it is likely that a third global shortage in cocoa supply will happen in this year’s harvest, starting in October, when the El Nino weather phenomenon tends to get worse.
This will lead to the continued increase in cocoa prices, which affects the input price of one of the most important raw materials to create cakes, chocolates, drinks, and snacks. It can cause inflation in the food market, while the overall food cost pressure has cooled down.
The world’s top chocolate makers, such as Hershey Co. and Lindt & Spruengli AG, have warned that rising input prices will affect buyer’s demand. This was observed in practice when there were signs of cooling down in the European and Asian chocolate markets.
Mr. Darren Stetzel, Vice President in charge of “soft” commodities for Asia at market broker StoneX, said: “The current situation looks relatively bad unless there is a significant improvement in the outlook.”
In mid-September, the cocoa price on the New York Commodity Exchange (USA) reached a 12-year high, approaching the record price at the end of 1979. At that time, the skyrocketing price of cocoa was caused by excessive rainfall, along with an outbreak of pests and several diseases that destroyed crops in West Africa.
CEO of the industry regulator Le Conseil Cafe-Cacao, Mr. Yves Kone, said that the global cocoa farming and processing industry is facing more and more challenges, which could lead to the creation of new price levels for cocoa. In addition to weather-related risks, countries, including EU members, are strengthening product traceability rules and preventing smuggling. This also creates barriers for merchants in the industry.
In July, some traders forecast that production of the main cocoa crop in Cote d’Ivoire, which runs from October 1, 2023, to the end of March 2024, would fall by nearly a fifth compared to last year’s crop. However, the volume of supply may be more because some farmers have retained a large amount of cocoa harvested from secondary crops, which are smaller during the year, due to the anticipation that cocoa prices will increase in the new crop./.