Cocoa futures surged to a fresh record in New York on Monday, reflecting renewed supply concerns that threaten to push up chocolate prices for both producers and consumers. The most-active contract rose as much as 4.1% to $11,768 a ton, doubling its value in 2024 and marking a new high in the global cocoa market.
This price rally follows a series of weak harvests in West Africa, the world’s largest cocoa-producing region, which has led to a third consecutive global supply deficit. Hopes for a recovery have been dashed by adverse weather, further limiting the ability to replenish already-depleted stockpiles.
The cocoa market’s volatility has been exacerbated by higher trading costs, prompting many traders to exit their positions. This trend saw aggregate open interest drop to its lowest level in a decade in November, thinning liquidity and amplifying price swings.
Cocoa’s persistent supply woes are compounded by systemic challenges, including crop diseases and low farmer incomes. Additionally, newly-planted cocoa trees require years to bear fruit, delaying any significant production recovery.
These supply pressures have forced companies like Hershey Co. to hike prices, transferring the financial burden to consumers. As the market grapples with these challenges, chocolatiers and traders alike face a period of heightened uncertainty and rising costs.