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Record high cocoa prices mark global shortage amid poor harvests
Cocoa prices reached a historic high on March 26th, exceeding $10,000 per tonne for the first time. This surge attributed to declining harvests in Africa, saw cocoa futures in New York soar to $10,080, doubling in value within two months.
Despite a slight dip to $9,624 by the end of the trading session, the significant price escalation has echoed throughout the industry. Traders warn about an imminent cocoa bean shortage and the potential for increased chocolate prices in response, Semafor reports.
Andrew Moriarty, price reporting manager at Mintec, described the market as "out of control," indicating widespread apprehension among market participants. The root cause of this unprecedented surge lies in poor weather conditions and disease outbreaks that have severely impacted crop yields in key cocoa-producing countries such as Ivory Coast and Ghana. These nations collectively supply over two-thirds of the world's cocoa beans.
Moriarty noted the dire situation faced by processors and manufacturers alike, struggling to procure enough cocoa butter and cocoa liquor, which has further fueled the upward trajectory of prices.
Decades of low prices have left farmers in West Africa struggling to maintain their plantations, resulting in aging and vulnerable cocoa trees susceptible to disease and extreme weather events. The consequence has been a global cocoa shortfall for the third consecutive year, precipitating an extraordinary rally in cocoa prices.
Judy Ganes, an independent soft commodities consultant, remarked, "The handwriting was on the wall for a long time that there was going to be a major reduction in supply this year," indicating the predictability of the current crisis, the Financial Times reports.
The industry now finds itself in a state of panic as efforts to secure sufficient cocoa beans to meet consumer demand intensify.
