The cocoa prices have been skyrocketing, hitting new records almost every day in the New York and London markets. This surge is fueled by disastrous harvests in Ivory Coast and Ghana, the world’s two leading producers. The May delivery contract in London has hit a new all-time high of 4,248 pounds per tonne, while the March delivery contract traded in New York has reached a 46-year high of $5,288 per tonne. Siaka Sylla of Scapen, a cooperative of 1,500 growers in the Divo region of Ivory Coast, expressed his shock to Agence France Presse, stating, “In 20 years I have never seen a harvest like this.”
The primary cause of this price increase is excessive rainfall, which has caused irreversible damage to the crops. As a result, cocoa prices have more than doubled in both New York and London since the start of 2023, due to the anticipated supply shortage. The prices now far exceed the highs of 2011, which were due to the devastating post-election crisis in Côte d’Ivoire in 2010-2011 that resulted in over 3,000 deaths.
Carsten Fritsch, an analyst at Commerzbank, believes it’s only a matter of time before the price of cocoa in New York hits its 1977 all-time high of $5,379 a tonne. The reduced production due to diseases developed after heavy rains, including the black pod disease that causes cocoa pods to rot due to excess humidity, has been the primary catalyst for the price surge over the past year. Cocoa requires a delicate balance of sun and rainfall to flourish. As early as the end of 2023, analysts had raised concerns about the inevitable price surge due to extreme weather events.
Ivory Coast is the world’s top cocoa producer, followed by Ghana. They account for almost 60% of the total global production for the 2022/23 harvest, according to estimates from the International Cocoa Organization (Icco). The Coffee-Cocoa Council (CCC), the regulatory body for the sector in Côte d’Ivoire, suspended the sale of export contracts for the current campaign in July due to heavy rains affecting the cocoa fields. Exporters estimate that the number of arrivals at Côte d’Ivoire’s ports between the start of the harvest season in October and the end of January fell by 35% compared to the same period last year, says Carsten Fritsch. He predicts that the cocoa market will likely face a supply deficit during the current 2023/24 agricultural campaign, marking the third consecutive year.