Cocoa Futures Surge Past $11,700 As Supply Crisis Deepens
Cocoa futures surged to a historic high on Monday, with the most actively traded contract reaching $11,821 per ton, marking a 4.61% increase. The commodity’s price has more than doubled since the start of 2024, driven by persistent supply shortages and mounting challenges in West Africa’s cocoa-producing regions.
The crisis stems from multiple factors, including a devastating outbreak of swollen shoot disease in Ghana, where 81% of the Western North region is infected. The virus, which ultimately kills cocoa trees, has affected 500,000 hectares of Ghana’s cocoa-growing land. Similar concerns exist in Ivory Coast, with estimates suggesting up to 30% of its plantations may be infected.
Read: 81% of Ghana’s Major Cocoa Region Infected with Swollen Shoot Disease
These challenges, combined with adverse weather conditions, have severely impacted global production. Ghana, traditionally producing over 800,000 tons annually, is expected to yield just over half that amount this season. Together with Ivory Coast, these nations typically supply approximately 60% of the world’s cocoa.
Market dynamics have further complicated the situation, with traders facing increased costs to maintain their positions. Open interest has fallen to its lowest level in ten years as of November.
Major chocolate manufacturers, including Hershey Co. (NYSE: HSY), have responded by raising product prices. In June, Nestlé (SWX: NESN) warned of “cocoaflation.”
The industry faces additional structural challenges, including historically low farmer wages and the extended time required for newly planted trees to mature. With no quick solutions available, the supply shortfall marks its third consecutive year.
Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
