Cocoa Crunch: Navigating Global Supply Shortages and Surging Prices with Tridge's Comprehensive Solutions

Cocoa Powder

Published Jan 11, 2024

Adverse weather conditions in Côte d’Ivoire and Ghana, major cocoa producers, have disrupted cocoa production, significantly decreasing port arrivals. In Côte d’Ivoire, early December arrivals saw a 35% decline from the previous season, while Ghana experienced a 51% decrease. This supply shortage has propelled cocoa prices to historic highs, reaching USD 4,546.63/mt on Nov 29, marking an 80.6% increase YoY. The global surge in cocoa prices emphasizes the importance of Tridge's comprehensive solutions, including Tridge TDS and Social Marketplace, for cocoa buyers navigating the dynamic market conditions.

The ongoing adverse weather conditions have created a challenging environment for cocoa farmers in Côte d’Ivoire and Ghana, the world's leading producers of cocoa beans. The heavy rains have disrupted various stages of cocoa production, including the health of young cocoa pods, the spread of diseases like black pod disease, and the crucial processes of fermentation and drying. The excessive rainfall has also made transporting cocoa beans to ports difficult due to poor road conditions.

This weather-induced disruption has resulted in a substantial decrease in cocoa arrivals at ports compared to the previous season. In Côte d’Ivoire, where the main crop arrivals reached 548,000 metric tons (mt) by early December, there was a 35% decline from the same period in the previous season. In Ghana, graded and sealed cocoa data showed a significant 51% decrease, reaching 189,470 mt compared to 383,496 mt in the same period of the previous year.

The impact of these supply shortages is reflected in the continued upward trajectory of cocoa prices. According to the Markets Insider’s Indicator, the spot price for cocoa reached USD 4,508.25/mt on Jan-24, an increase of 80.6% compared to USD 2,496.60/mt the previous year. On November 29, 2023, the price surged to USD 4,546.63/mt, the highest in history, further emphasizing the recent bullish trend.

Figure 1:Cocoa Spot Price

The surge in cocoa prices is not limited to specific markets; it's a global trend observed in the London and New York futures markets. In London, prices had reached USD 4,522/mt by the end of Nov-23, marking a substantial 23% increase from the beginning of the season in October. November saw prices averaging at USD 4,335/mt, with fluctuations between USD 4,054/mt and USD 4,547/mt. Similarly, cocoa prices in New York experienced a significant boost, reaching USD 4,458/mt by the end of Nov-23. This represents a remarkable 27% increase from the October starting point. The average prices during Nov-23 were USD 4,072/mt, ranging between USD 3,795/mt and USD 4,458/mt. Comparing these figures to the same period a year ago reveals the magnitude of the price surge. In Nov-22, cocoa prices were substantially lower, with the nearby contract averaging USD 2,429/mt in London and USD 2,445/mt in New York. The price fluctuations during that time were between USD 2,313/mt and USD 2,503/mt in London and between USD 2,352/mt and USD 2,564/mt in New York.

The current bullish trend in global cocoa prices highlights the significance of robust and comprehensive solutions for cocoa buyers looking to navigate the market effectively. Tridge offers a suite of services designed to empower cocoa buyers in making informed decisions and optimizing their trade strategies.

One crucial tool is the Tridge Transaction Data Service (TDS), which allows buyers to identify verified suppliers and access essential trade histories. This data-driven approach equips buyers with insights into market dynamics, supplier performance, and historical pricing trends. In turn, this enables them to negotiate better deals and build enduring relationships with trusted suppliers. On the other hand, Tridge’s Social Marketplace offers a platform for buyers to discover and connect with suitable trade partners. This fosters collaboration and facilitates efficient communication between buyers and suppliers, crucial for ensuring a stable and reliable procurement process.

Tridge's Outlook Reports further enhance the buyer's toolkit by offering valuable insights into the cocoa market. These reports cover market intelligence, trends, and strategic considerations. Armed with this knowledge, buyers can adapt their strategies with agility and foresight, staying ahead in a dynamic and growing cocoa sector. For cocoa buyers in major importing countries such as the Netherlands, Malaysia, and the United States (US), Tridge's integrated approach ensures they have the necessary tools and information to navigate the challenges posed by the current market conditions effectively.

The ongoing concerns about supply shortages and the resulting price hikes raise uncertainties about the outlook for the remaining main crop. The cocoa market will likely continue closely monitoring weather patterns and their impact on the harvest in these key cocoa-producing regions. Additionally, efforts to address infrastructure challenges, such as improving roads for transportation, will be essential for ensuring the resilience of cocoa production in the face of unpredictable weather conditions.