Recent plunge in cocoa prices has caught the attention of market watchers, traders and, most importantly, the economies of Ghana and Ivory Coast, two countries at the heart of the world’s cocoa supply. Cocoa prices last traded in mid-March at around $7,175, after falling about $1,700 per metric ton. This significant drop in cocoa market prices is not just a passing trend. it brings to light wider economic, environmental and social changes affecting the cost of cocoa and its impact in these key producing countries.
The analysis you need to know:
The latest decline in the price of coke marked the biggest one-day drop since at least 1980, reflecting a volatile period where prices had previously soared to record highs. Earlier in the year, cocoa futures had arrived an all-time high of $11,722 per metric ton due to a shortage of cocoa beans, affected by supply disruptions such as heavy rainfall and disease.
Cocoa serves as a critical pillar for the economies of Côte d’Ivoire and Ghana, which recently hit prices of $10,000 per metric ton for the first time. The cocoa of these countries represents about 15% and 2-3% of their GDP respectively. CultureBanx He said fluctuations in international cocoa prices represent a significant opportunity, affecting countless people who depend on cocoa farming for their livelihoods.
Ivory Coast and Ghana form its backbone global cocoa industry, with the former holding the title of the world’s leading cocoa producer, contributing about 45% to global supply, but receiving a fraction of the chocolate industry’s huge annual value. Ivory Coast is ambitiously aiming to increase its production to 2 million tons by 2025, despite a predicted drop of 28.5% at the start of the 2023/2024 season due to adverse weather conditions. Likewise, Ghana’s COCOBOD had to revise its production forecast all the way back 650,000-700,000 metric tonnes for 2023-24hitting a 14-year low.
Price fluctuations:
The economic impact of cocoa price fluctuations is acute in Ghana and Cote d’Ivoire, where cocoa is a critical export. In response to declining yields and international market volatility, both governments intervened by significantly increasing farm gate prices. in Ivory Coast by 50% and in Ghana by 58.26%. Despite these efforts, local economies face challenges due to dependence on cocoa exports, which affect nations’ foreign exchange reserves and impact large trading companies.
JPMorgan said cocoa prices are expected to remain high but may ease slightly in the medium term, stabilizing around $6,000 as global climate patterns potentially improve cocoa yields in large production areas. However, structural challenges such as significant loss of cocoa trees and higher production costs associated with sustainability concerns may extend the period of high cocoa prices.
Situational awareness:
Unfortunately, most cocoa farming families live in poverty, relying on cocoa about two-thirds of their income. On Ivory Coast’s community farms, the harsh reality is unfolding with millions of cocoa farmers making an average just $0.78 per day.
As cocoa markets continue to navigate through its turbulent waves price fluctuationsthe effects extend far beyond trading levels, profoundly affecting the lives of farmers in Ghana and Ivory Coast and resonating with global chocolate consumption patterns.