The largest cocoa producers in the world have a problem. In 2024, futures contracts skyrocketed to almost 13,000. dollars per ton, which was four times the long-term average. However, there was a correction quickly, which brought a sharp decline.
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Today, such rapid price fluctuations have led to congestion in warehouses and ports serious financial problems for exporters.
Two countries were particularly affected by the problems. Côte d'Ivoire and Ghana, the two largest cocoa producers in the world. Both countries are currently struggling with oversupply and hundreds of thousands of tons of unsold product lying in ports.
The cocoa market is facing changes
In response to these problems, Ghana, the second largest producer, began the process this week of easing stringent state regulations on domestic prices.
Andrew Moriarty, a cocoa expert from the research company Expana, told Bloomberg that Ghana's actions are an attempt to create “a more sustainable financial solution“, which “This potentially eliminates some risk of future supply disruptions“.
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The world's largest producer, Côte d'Ivoire, has not yet revealed its plans. However, it is almost certain that it will also decide to introduce regulations. According to Bloomberg, dissatisfaction with the market situation is growing in the country Traders are refraining from purchasing grains before the upcoming harvest in the hope of further price declines.
Price swings on the cocoa market
Such hopes are not unfounded. Over the last twelve months, we have seen a strong decline in cocoa futures, which are currently valued at PLN 3,000. $652 per ton. This is the lowest value since October 2023.
Additionally, and it is worth emphasizing, we currently have oversupply on the market. Data quoted by Bloomberg show that only Ghana and Côte d'Ivoire have a total of about 200,000 in warehouses. tons of unsold beans, and global overproduction is estimated at almost 400,000. tone.
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All this is compounded by a decline in demand. The price swing we have observed in recent years forced chocolate producers to look for ways to reduce production costs. Some have changed the formulations of their products, replacing cocoa butter with cheaper alternatives such as vegetable oils, or adding ingredients such as nuts or cookies.
This means that we can expect further declines in the market in the near future.
