Since the Beginning of 2023, Cocoa Prices Have Skyrocketed by an Incredible 125 Percent

The Global Supply Chain Pressure Index rose in January to -0.11 or by 0.4 points compared to December last year. When the index is in negative ‘territory’, it is good news, as it means that pressures on supply chains are easing and that demand will be met.

The index spent almost the entire year of 2023 in negative territory, but due to the escalation of conflict in the Suez Canal, the index is rapidly retreating from negative territory. The main causes of the new rise in the index are the escalation in the Red Sea, which disrupts global supply chains, and the war in the Middle East. The Houthi attack in the Red Sea affects shipping routes, which now have to find alternative routes that increase delivery times and costs, according to the latest HUP weekly focus.

India, as the world’s largest rice exporter, is experiencing a sharp decline in demand for Basmati rice as prices have become too high for European residents due to route changes. The situation in China exacerbates the impact on global chains, as China is economically slowing down. The Eurozone is also not faring well. German industrial data is declining, GDP is close to technical recession, which affects supply chains to Europe.

Further escalation of conflict increases pressures on supply chains and slows the flow of goods, which drives inflation. The price of cocoa has reached a historic high of $5,800 per ton, observed over the last 46 years. Since the beginning of 2023, the price of cocoa has skyrocketed by as much as 125 percent.

The reason for the recent meteoric rise in cocoa prices lies in the uncertainty of the weather forecast and the fear that dry weather combined with strong, dry, and sandy Harmattan winds will hit the cocoa office and significantly affect the harvesting and picking of cocoa in West Africa in April.

Current figures suggest that cocoa harvests are already lagging significantly behind last year’s figures, marking the fourth consecutive year that the cocoa market will face output deficit issues. According to exporter estimates, arrivals of cocoa shipments at ports in Côte d’Ivoire, the world’s largest cocoa producer, were down by 35 percent in the period from the beginning of the harvest in October to the end of January compared to the same period last year.

With all the difficulties, it is only a matter of time before cocoa prices exceed the level of $6,000 per ton.