[updated 03.12.24]
Cocoa Market Update: What’s happening with prices?
The cocoa market is changing once again, with prices climbing due to growing concerns about crop yields, bean quality, and global supply shortages. Here’s what’s driving the changes and what it might mean for chocolate lovers and producers alike.
Cacao price ratesThe weather factor
West Africa, home to the largest cocoa-producing countries like Ghana and Nigeria, is experiencing dry and hot weather. This could impact the upcoming mid-crop, which begins in April. With weather conditions affecting harvests, the industry is bracing for a potential dip in production.
Bean quality matters
Bean quality from the Ivory Coast, the world’s largest cocoa producer, has also come under the spotlight. Recent harvests show higher bean counts—around 105 beans per 100 grams—which signals lower quality compared to the ideal counts of 80–100. This drop in quality adds pressure to the market.
Global stock concerns
Stockpiles of cocoa beans are dwindling, with US cocoa inventories at a 19-year low. Similarly, global stock ratios are tightening, with the International Cocoa Organisation (ICCO) projecting a 46-year low in the global stocks-to-grindings ratio. Shrinking supplies often lead to firmer prices, as seen in recent market trends.
Mixed signals from demand and supply
While cocoa demand remains robust in some regions—North American and Asian cocoa grinding figures are up—European grindings have dipped. On the supply side, there’s a slight silver lining: the pace of cocoa shipments from the Ivory Coast is increasing, and Cameroon’s production is on the rise. However, these factors have not offset the broader concerns about global deficits.
A historic deficit?
The ICCO has raised its global cocoa deficit forecast for 2023/24 to -462,000 metric tonnes, the largest in over 60 years. With lower production estimates and challenges in key regions like Ghana, where the harvest hit a 23-year low last season, the market remains under pressure.
What does this mean?
For now, these dynamics are keeping cocoa prices on an upward trajectory. For chocolate enthusiasts, it’s a reminder of how the journey from bean to bar is influenced by a complex interplay of factors—from weather and quality to global demand and supply.
We’ll continue to keep an eye on the cocoa market and share updates as they unfold. On a personal note, we’re pleased to share that going into the new year our Callebaut and Belcolade pricing will remain at the current rate for as long as possible – so now’s your chance to stock up! Stay tuned for more insights into the world of cocoa and its impact on the delightful treats we all love!
[updated 15.08.24]
Movements within the cocoa market
Although the cocoa market has dropped back from the peak we saw in April where the market was over £9,000/mt it is still very high and extremely volatile. This is likely to continue for many months to come as the industry has very little contract cover due to reluctance to cover long term whilst prices are still very high. Historically the average industry cover has been around 9-12 months but is currently only averaging around 6 months. This creates volatility where some cover is taken when there is a drop in the market which then has the effect of pushing the market up higher. In the last three months the market has hovered between £6,000 - £7,000/mt.
Historically prices for booking future contracts have always been higher but we are still seeing an inverted market where future prices are lower than current price periods which suggest the market believes that prices will come down in the long term. An inverted market points to a risk in the short term, in this case the availability of beans. It could correct either way: to come down as the risk reduces (eg good crops) or the future positions might increase as we get closer to those positions. However, this will very much depend on the next harvests from the Ivory Coast and Ghana which will be around October. Cocoa arrivals from the Ivory Coast are still 25-30% down and even a good harvest will not cover the current deficit. In addition we are not really seeing a slowdown in demand because grinding figures are only down 2-3% despite the very large price increases, whilst the largest price increases are still to hit the consumer market. Some market analysts are predicting that the market could move back into a surplus position late 2025 into 2027.
Harvest predictions
Early indications from The Ivory Coast point towards a good crop compared to recent crops. The trees have plenty of flowers but adverse weather conditions between now and October could still prevent the flowers from fully developing into pods. We will not know for sure how good the crop will be until around the end of October/early November once actual arrival figures come in. In addition the European Union's upcoming Deforestation-free Regulation will also ban imports of cocoa produced on recently deforested land, posing a challenge for West African farmers who rely heavily on the European market. This regulation aims to curb deforestation but adds complexity and costs to the supply chain and may also increase prices further.
What does this mean for chocolate prices?
Due to the currently volatility of the market and continued concerns over supply, chocolate prices are likely to increase further into Q4 2024. They could possibly flatline in Q1 2025 but this is by no means guaranteed. Beans from the October harvest will reach Europe as of January 2025 so if the harvest is good we may see prices drop a bit from Q2 2025. Nestle and Mondelez are expecting a drop in consumer demand next year once high prices arrive in the consumer market. If global demand does drop we may see prices fall further. Prices for milk and white chocolate will increase more in the short term due to the cocoa butter ratio which is currently around 4.3. The butter ratio is the premium paid for cocoa butter compared to the market price of cocoa beans. As milk and white chocolate contain more cocoa butter than dark chocolate we can expect milk and white chocolate prices to increase more than dark chocolate.
[07.03.24]
Chocolate price rises explained
It’s impossible not to notice that the price of chocolate has risen exponentially over the last 12 months.
As one of the UK’s biggest chocolate distributors, we felt it was important to give you an update on the current trading situation and share our predictions on how we expect the market will perform in the coming year to help you make informed decisions.
Here, Steve Calver, Commercial Director at Henley Bridge with over 30 years’ expertise tracking the cocoa markets, shares his knowledge and expertise…
What affects chocolate pricing?
Chocolate is a commodity and therefore its price fluctuates based on supply and demand.
Factors such as global production levels, weather conditions and crop disease play significant roles in shaping price trends. For instance, lower cocoa production in major growing regions, like the Ivory Coast and Ghana, due to adverse weather conditions can contribute to tighter market conditions and influence prices.
Growing demand for real chocolate from emerging countries, such as India and China, has also contributed to increased pressure on the commodity market.
The current situation
Cacao pricing is experiencing a historical high. Figures released this month reveal that raw cacao prices have reached a record high of £4,700 per tonne, significantly more than double the price it was in February 2023 which was around £1,900 per tonne.
There are two cocoa crops a year – in May and October – and the next crop is expected to be affected by the El Nino weather pattern, resulting in drier weather conditions in Africa where 75% of the world’s cacao is grown.
Cacao price rates
Predictions for this year
Chocolate prices unfortunately look set to remain at a record high for the whole of 2024.
Price increases of 15-20% are likely for the first half of 2024 - and could potentially be replicated during the second half of the year.
Colour co-ordination
Dark chocolate was historically cheaper than milk or white chocolate (which contains more sugar and milk powder) but this trend has been completely reversed from an ingredients perspective with dark chocolate now commanding the same or similar pricing.
2025 and beyond
Examining market analysis and future projections, it’s predicted that prices could start to fall as we move into 2025/6. Due to the high cost of real chocolate, some markets may go back to using imitation chocolate which would, in turn, reduce demand, but that’s just pure speculation at this stage.
What is Henley Bridge doing to help?
From a distributor perspective, the commercial team at Henley Bridge is working hard to try and soften the blow for customers.
We held off price increases until February 1, delaying the increase by one month, and are stocking up where possible to hold off further price increases.
We’re also trying to give a one month notice period of any impending price increases to give customers time to react.
What can customers do?
Chocolate prices rises can be addressed in two ways. You can either pass on the increases to your customers by upping the price of your products, or, as we have seen with large manufacturers, adopt the ‘shrinkflation’ method, in other words, make smaller products but sell them for the same price.
