With sugar limitations and cocoa costs at a 45-year high, chocolates become bitter
Cocoa prices rose by ten percent in October. In the meanwhile, the commodity's price has increased by around 64% in the last 12 months.
The damage to cocoa plantations is mostly the result of unfavorable weather conditions along the coast of West Africa, which are mostly caused by El Nino's negative impacts. Notably, cocoa prices have not fallen to their maximum level since the mid-1970s, when crop damage from unpredictable weather had hurt cocoa yields. (Photo by Reuters)
Since the black pod disease developed due to unfavorable weather in West Africa and the ensuing supply shortage, cocoa prices have started to simmer at a 45-year high.
A third consecutive year of deficit for the 2023–24 season might be caused by the black pod disease, which causes cocoa pods to become black and decay, spreading further and affecting crop quality and productivity.
The world's top and second-largest producers of cocoa, Ghana and the Ivory Coast, have severely reduced their supply, bringing the total amount of cocoa imported into international markets down to 56,000 tonnes this season from 91,000 tonnes the previous year. Demand in overseas markets has also been impacted by the commodity's price increase. The demand for cocoa fell by 18% in the third quarter of 2023, and there has been no indication of a rebound in the fourth quarter.
While the price of the product has surged by about 64 percent over the previous year, cocoa prices jumped by 10 percent in October.
Damage to cocoa plantations is thought to be mostly caused by unfavorable weather conditions on the West African coast, primarily due to El Niño. For the first time since the mid-1970s, when unpredictable weather caused crop damage and skyrocketing costs, this is the case. When El Niño struck again in 2016, the crop was severely damaged, sending prices to a 12-year high.
Early in June, the price of cocoa reached 46-year highs, driven by a decline in output. In the Ivory Coast, excessive rain caused several cocoa plantations to flood, harming the primary harvest, which starts in October. The region's unceasing rains also interfered with the drying process of the cocoa beans that were harvested in the summer.
During the holiday season, chocolate costs are skyrocketing due to rising cocoa prices. Due to unfavorable weather in West Africa and India, there is a restricted supply of cocoa and sugar, which is used to make chocolates and sweets. This is predicted to drive up the pricing of the final goods, especially with key holidays like Diwali, Halloween, and Christmas coming up soon. In a market that is struggling with inflation, it is expected that this would also affect consumption.
In order to avoid uncontrolled sugar exports and to guarantee enough sugar is available for local consumption at a fair price, India, the second-largest sugar exporter in the world, put sugar in a restricted category last year and kept it there until October 31, 2023.
The Indian Director General of Foreign Trade (DGFT) put a hold on sugar exports beyond October 31 until additional directives were issued on October 18.
According to Ministry of Consumer Affairs statistics, domestic sugar prices increased by over 2.5 percent in October compared to the same month last year. In September, the commodity's Wholesale Price Inflation (CPI) was 4.73 percent.
