Cocoa Surges Past $9200, ICCO Raises Alarm on Price Rally
In a startling turn of events for the global cocoa market, cocoa prices have soared past the $9200 mark for the first time in history, triggering concerns among industry experts.
The International Cocoa Organisation (ICCO) quoted a tonne of cocoa at $9,285.87 for its Monday, March 26, 2024, daily price update.
The situation is said to have sparked a scramble for the commodity as the global cocoa bean supply crunch tightens.
In its monthly Cocoa Market Report for February, the ICCO sounded alarmed at the unprecedented price rally, citing potential ramifications for producers, companies, and consumers worldwide.
“High cocoa prices remain a significant concern due to a supply shortfall from key producers in Côte d’Ivoire and Ghana, resulting in a 28% and 35% decrease in arrivals at Ivorian and Ghanaian ports, respectively, compared to the previous season.”
The report highlighted that relative stocks of Ivorian and Ghanaian beans are declining in the US market.
“They are assumed to be attracted into the European market in anticipation of compliance with the EU deforestation-free regulation,” said ICCO.
The surge in cocoa prices comes amidst a supply deficit on account of climate change-induced adverse weather conditions and the Cocoa Swollen Shoot Virus disease outbreak.
The ICCO, the primary intergovernmental organisation for cocoa-producing and consuming countries, has expressed apprehension over the implications of this sharp price increase.
Experts within the cocoa industry warn that such a dramatic rise in cocoa prices could have far-reaching consequences.
For cocoa-producing countries in West Africa, which account for over two-thirds of global cocoa production, the price rally may offer short-term economic benefits where produce is avaiable.
However, there are concerns that prolonged high prices could exacerbate challenges such as deforestation, child labour, and poverty among cocoa farmers.
Furthermore, the soaring cocoa prices could also impact consumers, potentially leading to higher retail prices for chocolate products.
Last week, Bloomberg reported shortages and skyrocketing prices of chocolate at retail outlets.
“It’s down to shortages and soaring prices of main ingredient cocoa, and “everybody is panicking.” That’s how the head of Guan Chong, one of the world’s biggest cocoa processors, summed up the situation in the market right now.”
Fears are that the prevailing situation could pose a significant challenge for chocolatiers and confectionery companies, who may face pressure to absorb the increased costs or continue to pass them on to consumers.
The ICCO has previously signalled that it is closely monitoring the situation and has called for concerted efforts to address the underlying factors driving the price rally.
Sustainable cocoa production practices, and concerted industry action on tackling disease, are among the measures advocated to mitigate the production decline and supply crunch.
As cocoa prices continue to surge past historic highs, stakeholders across the cocoa supply chain are urged to collaborate in finding solutions that balance the economic interests of producers with the long-term sustainability of the industry.
The coming months will be crucial in determining the trajectory of cocoa prices and shaping the future of one of the world’s most beloved commodities.
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