① The International Cocoa Organization (ICCO) stated that despite the significant increase in cocoa price, the consumption has not decreased, and the shortage of cocoa this crushing season may exceed previous expectations. ② Although the recent cocoa futures prices have fallen significantly, dropping below $10,000 per ton, it is still far above historical average levels. Some analysts believe that the rise in cocoa futures has peaked.
On June 1, Caixin Financial reported that the International Cocoa Organization (ICCO) stated that despite the significant increase in cocoa price, the consumption has not decreased, and the shortage of cocoa this crushing season may be greater than previously expected.
ICCO released a report stating that due to the increase in cocoa consumption countries grinding, it is estimated that the market demand for cocoa will exceed 439,000 tons of output by the 2023-24 crushing season (ending in September). In contrast, the organization predicted a supply gap of 374,000 tons in February of this year.
ICCO stated: "Current available data shows that despite record-breaking increases in cocoa prices, grinding activities have continued in importing countries. It is certain that the supply gap after the 2023-24 crushing season will be higher than previous expectations."
Due to severe weather, aging trees, and crop diseases, cocoa production in West Africa's main cocoa producing area has declined significantly, and cocoa prices have more than doubled this year. New York cocoa futures hit a historic high of $11,722 per ton in April.
Although the recent cocoa futures prices have fallen significantly, dropping below $10,000 per ton, it is still far above historical average levels. Some analysts believe that the rise in cocoa futures has peaked.
ICCO has raised its estimate of global cocoa grinding in the 2023-24 crushing season from the initial 4.78 million tons to 4.86 million tons, and also raised its output estimate for the same period by 12,000 tons to 4.46 million tons.
About two-thirds of the world's cocoa comes from West Africa, mainly Cote d'Ivoire and Ghana. In recent years, excessive rainfall and cocoa tree diseases have caused a reduction in cocoa bean yields in Cote d'Ivoire and Ghana, leading to three consecutive years of poor harvests.
With the sharp rise in cocoa prices, Brazil and other South American countries also want to get a share of the market.
Some Brazilian farmers have already begun planting cocoa trees. Brazil was also once one of the world's major cocoa producers, but a serious plant disease outbreak in the late 1980s caused a large number of cocoa trees to wither, and their status as a major cocoa producer has since plummeted.
However, the cocoa trees planted by Brazilian farmers will not produce results for at least a year, so they cannot fill the market supply gap in the short to medium term.