[Christian Harris]

Cocoa futures have experienced a significant downturn, falling below $9,400 per tonne and approaching a three-month low.

This decline comes as the market grapples with growing concerns over weakening demand in the face of historically high prices.

Major chocolate manufacturers, including Hershey and Mondelez have signalled that additional price increases may be necessary as they continue to navigate the challenges posed by persistently elevated cocoa costs.

Mondelez anticipates that chocolate snack prices could potentially rise by as much as 50%, reflecting the severity of the situation.

On the supply side, the outlook remains uncertain.

Cocoa farmers in the Ivory Coast, a key producing region, have reported poor prospects for the mid-crop harvest due to an extended dry season.

This follows a period of significant supply disruptions that drove cocoa prices to an all-time high of over $12,600 per tonne in December 2024.

The surge was primarily attributed to crop issues and adverse weather conditions in Ivory Coast and Ghana, which together account for approximately 60% of global cocoa production.

Further complicating the supply situation, a dispute has emerged in the Ivory Coast between major exporters and local shippers, adding another layer of uncertainty to the market.

This conflict could potentially impact the smooth flow of cocoa from the world’s largest producer to international markets.

As the cocoa market continues to navigate these complex dynamics, both producers and consumers are likely to feel the impact.

Chocolate manufacturers are exploring various strategies to manage costs, including potential recipe reformulations and innovative approaches across multiple industries.

Meanwhile, consumers may need to brace for higher prices on chocolate products in the coming months.

Source: Trading Economics

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