Unprecedented Cocoa Prices: Supply and Demand Disruption in the Chocolate Industry

Cocoa prices have surged to unprecedented heights, with a ton now costing more than $10,000. This increase is due to poor harvests caused by older and diseased trees, as well as the weather phenomenon El Niño. Despite these challenges, investing in cocoa could be profitable as demand for the product continues to rise.

In recent months, the price of cocoa has increased by 186 percent on the New York futures market. This is even faster than the rise of Bitcoin, which has increased by 150 percent. The high price of cocoa can be attributed to extreme weather conditions in Ghana and the Ivory Coast, where more than 60 percent of global cocoa production takes place. These countries have been hit hard by drought caused by El Niño. Efforts to increase cocoa production in Brazil and Ecuador are underway, but it will take years for these trees to bear fruit.

The high prices of cocoa are also affecting Belgian chocolate producers, who are facing a challenge in the coming years. The industry is worth 6.1 billion euros, with exports accounting for 3.4 billion euros. Belgium is the world’s second largest exporter of chocolate, representing 11 percent of the world market. The port of Antwerp is also the largest storage location for cocoa beans in the world. As a result of the high prices, Belgian producers like Libeert can partially protect themselves against record prices by buying cocoa at times when it’s low-priced.

While Belgian producers are facing challenges due to high prices and supply shortages, demand for chocolate remains strong worldwide. Companies like Hershey and Mondelez have already indicated that they will pass on some of those costs to consumers through higher prices for their products.

In summary, while investing in cocoa may be risky due to fluctuating supply and demand factors such as disease outbreaks and climate change-induced droughts; demand remains strong worldwide and companies may pass on some of these costs onto consumers through higher prices for their products