Tuesday, July 18, 2023, saw the greatest price increase for cocoa in New York in more than 12 years, just a few weeks after it experienced a 46-year high in London due to limited supply for dealers and chocolate manufacturers.
Before closing at $3,407, or up 1.4%, prices for the benchmark cocoa contract at the Intercontinental Exchange in New York reached their highest level since mid-March 2011.
Due to an extraordinary decline in output in the western part of Africa, which provides the majority of the basic ingredients to chocolate manufacturers globally, as well as the potential for future unfavourable weather, cocoa has become one of the most in-demand crop products globally.
One of the regions that analysts warn could have drier-than-average weather in the next months due to the El Nino trend that is developing includes Ghana and Ivory Coast, as well as Nigeria and Cameroon.
“The term El Niño refers to a warming of the ocean surface, or above-average sea surface temperatures, in the central and eastern tropical Pacific Ocean,” United States Geological Surveys explains.
“Cocoa production is usually weaker in an El Nino year. We don’t know how strong this current El Nino will be, but forecasters say it will probably be strong,” said Rabobank cocoa analyst Paul Joules.
“The 2023/24 mid-crop could be affected, as well as the 2024/25 main crop,” he added, referring to the two annual cocoa crops African countries harvest.
Exporters estimated last Monday that there was 4% less cocoa arriving at ports to be shipped in the season compared to the previous year in the world’s top producer, Ivory Coast.
The price per metric ton for London cocoa futures increased by 18 pounds, or 0.7%, to 2,532 pounds.
