• In recent years, the cocoa production sector has faced major challenges, including prolonged droughts and crop losses.
• When cocoa prices hit a record high of $12.261 per tonne in April, this had a significant impact on the chocolate industry.
right OPEC Fund for International Development, Ghana is the world's second largest producer of cocoa, supplying about a fifth of the world's cocoa each season. Ghana and Côte d'Ivoire contribute about 60% of the world's cocoa supply.
Ghana has seen a significant drop in cocoa production for the third consecutive season. Production there has been adversely affected by pests, diseases and the impact of climate change, particularly the El Niño phenomenon. This ecological decline threatens the livelihoods of cocoa farmers, making achieving a fair and sustainable income a considerable effort. Côte d'Ivoire has also faced continued disruption. Cocoa production fell to 683.269 tonnes in the 2021/22 season and to 656.140 tonnes in the 2022/2023 season.
Rising costs and unpredictability have affected the entire sector, prompting the adoption of innovative ideas to deal with the current problems in the cocoa production sector. Efforts to improve collaboration between all involved, implementing new technologies to mitigate the impact of seasonal challenges, research to improve scientific knowledge and launching revenue acceleration programs are key areas where the sector is focusing its time, attention and resources.
Prices in Europe and USA
Expectations of a better crop outlook for the 2024/25 season, particularly in Côte d'Ivoire and Ghana, have contributed to the current decline in US cocoa prices. However, there are still concerns about cocoa contract prices for the 2024/25 season – for the months of December 2024, March 2025 and May 2025. This implies that supply constraints could continue despite the better harvest outlook for this season.
In May 2024, data suggested consumer prices for cocoa in the European Union (EU) were 6,3% higher than in May 2023. However, according to the European Commission, cocoa price increases in Europe slowed by July 2024.
With the new season now underway, the market will wait to see if forecasts of better production materialize, which could lead to better grain availability, replenishment of stocks and consequently lower prices.
Factors affecting regions: consumption habits, stocks and regulations
The level of cocoa imports also fell in the US. Since September 2024, total net cocoa imports in bean equivalent have fallen by more than a quarter, according to ICCO (International Cocoa Organization) data. In the period October 2022 – March 2023, this total was 460.990 tons. This figure decreased by 26% to 343.200 tonnes between October 2023 and March 2024. The decrease can be attributed to the global production shortfall, which has led to lower imports of cocoa beans and, consequently, cocoa products.
Cocoa bean stocks in US ports also fell significantly, posting a 52% loss. However, processing remained high in the US despite reduced grain imports. Adjustments in the 2023/24 season increased by 2% compared to the first half of the 2022/23 season. Some analysts believe that this increase in cocoa bean processing in North America may be due to chocolate makers buying as much as they can before a supply shortage occurs.
Prices still high
Given the high cocoa prices, changes in cocoa products used for chocolate cannot be ruled out, with cocoa butter prices directly linked to cocoa bean prices. On the other hand, the price of cocoa powder is lower than that of cocoa butter.
Thus, the transition from chocolate confectionery to cocoa powder-based confectionery is forecast. Sweets or powdered products are usually cheaper and can support the growth of the manufacturing industry and consequently consumption.
In the context of the scheduled introduction of a European Union Regulation on Deforestation (EUDR), the European Union's (EU) trading partners, concerned about farmers' rights, are calling for more time to support the agricultural industry to comply with the deforestation regulation.
In June, Retailer Cocoa Collaboration (RCC) has published the latest results of its assessment of traders, highlighting the lack of progress in sustainability and ethical efforts. The report highlights that while the upcoming EUDR is boosting efforts to improve traceability in the growing cocoa supply chain, there are still challenges in addressing poverty and child exploitation in the sector, particularly in the indirect supply chain, when retailers avoid buying the ingredient directly from the farmer, opting to source it from another source.
In the perspective of the new cocoa bean harvesting season
The harvest season runs from October to June. For the 2024/2025 season, Cocobod ( The Ghana Cocoa Board ) anticipates a revival in cocoa production, with expectations of over 800.000 tonnes of cocoa. But after a difficult season for the third year in a row, recent cocoa production statistics do little to assuage current concerns within the industry.
Both Ghana and Cote d'Ivoire sell their crops on time. However, due to an insufficient harvest this season, Cocobod in Ghana is unable to fulfill its cocoa contracts with exporters and traders. Anticipating better harvests next season and potential price declines, traders can sell more cocoa now and purchase contracts to trade later at a reduced price to maximize their profits.
Article sources: RCC Trader Assessment Annual Reports; NGOs and industry share worries over EU anti-deforestation law; ACHIEVEMENTS IN THE COCOA SECTOR – COCOBOD CE PROJECTS A PROMISING FUTURE.
Article written by Gabriela Dan, Editor-in-Chief Arta Albă
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