The world cocoa market is creating a new turning point, a new era.

Cocoa prices are trading at an all-time high, surpassing the peak of 1977. In the context of negative supply, cocoa prices are expected to write a new page in history and bring this crop back to its true “poverty-free” nature.

Cocoa prices set new high after 47 years

After 47 years, cocoa prices surpassed the 1977 record for the first time on February 8 and are on track to create more new peaks. According to the Vietnam Commodity Exchange (MXV), cocoa prices on the New York Intercontinental Exchange (ICE-US) closed on February 26 at $6,557/ton, up 54.72% compared to the beginning of 2024 and 22% higher than the peak set in 1977.

Cocoa price developments in 2023-2024

The risk of supply shortages in Ivory Coast and Ghana, which together supply over 70% of the world’s cocoa, is one of the key factors driving up cocoa prices. According to data from Ivory Coast Customs, the country’s cocoa exports from October 2023 to February 25 fell 32% compared to the same period last year, to 1.16 million tonnes. At the same time, the volume of graded and packaged cocoa in Ghana from September 2023 to January this year also fell 35% compared to the previous period.

In addition to the shortage of supply, the soaring demand for cocoa ahead of Valentine's Day also resonates, pushing prices to new heights. According to statistics at the Vietnam Cocoa Conference, the global chocolate industry is consuming more than 4 million tons of cocoa beans annually, equivalent to 80-90% of the world's total output.

Mr. Pham Quang Anh, Director of Vietnam Commodity News Center

Commenting on the prospects of the cocoa market, Mr. Pham Quang Anh, Director of the Vietnam Commodity News Center, said: “ World cocoa prices are likely to remain at high levels until the end of the first quarter, or even the second quarter of this year. The cocoa supply-demand deficit may last for the third consecutive year as El Nino continues to rage in the world’s two leading producing countries.”

2023 has left a "mark" on the world cocoa industry

Before officially surpassing the 1977 peak, cocoa prices on the ICE-US Exchange recorded an impressive increase in 2023. According to MXV, by the end of December 2023, cocoa prices had reached 4,196 USD/ton, up 72% compared to the beginning of the year. This is also the commodity with the highest growth rate among all commodities being linked at MXV in 2023. At the same time, the impressive increase also helped cocoa prices in the past year surpass the peak in 2011 - the time when the Ivory Coast's cocoa export ban was issued.

Concerns about supply shortages in Ivory Coast and Ghana remain one of the core reasons for the surge in cocoa prices. Since the beginning of 2023, prolonged heavy rains in the two countries have caused disease outbreaks, pushing cocoa production to the risk of a sharp decline. By the fourth quarter of 2023, El Nino appeared, and the main cocoa-producing region experienced one of the worst heat waves in history, causing serious crop damage. According to aggregated sources, cocoa production in Ivory Coast in the 23/24 crop year is estimated to decrease by about 20% compared to the previous crop year, to 1.3 million tons. Along with that, in Ghana, output is expected to drop to a record low in 14 years, fluctuating between 650,000 - 700,000 tons.

Estimated cocoa production of Ivory Coast and Ghana

Concerns about a global supply shortage were further heightened as cocoa inventories at the ICE-US Exchange returned to their lowest level since mid-2021. As of December 2023, total cocoa inventories at the Exchange had fallen 13.49% from the beginning of the year to 4.17 million bags.

Opening up prospects for cocoa tree revival

Currently, many cocoa-producing countries are still "sitting on fire" due to crop failures, but MXV believes that this context is creating opportunities for this potential industry to turn a new page.

Cocoa is considered a “key crop” that can help West African farmers “change their lives”. However, in reality, this crop has not yet fulfilled its role as a “poverty-relief crop”. According to Wageningen University and Research Foundation, the average income of cocoa farmers is less than 2 USD/day, below the World Bank’s poverty line.

Similar to countries in West Africa, according to MXV's synthesis, the income of cocoa farmers in Vietnam is only from 1.5 to 2 million/month - an income that is not enough to cover living expenses. Poor economic efficiency and low productivity are the reasons limiting the potential for cocoa development in our country. Therefore, this crop is currently mainly intercropped with other crops such as cashew and coconut. According to Reuters statistics, in 2022, Vietnam's cocoa bean output will be around 2,000 tons, accounting for a modest proportion of approximately 0.04% of the total global cocoa output.

Since 2023, when cocoa prices have continuously set new, unprecedented peaks in history, cocoa trees have the opportunity to return to their true nature of “escape from poverty”. With gradually improving economic benefits, this could be a new “turning point” for farmers to develop cocoa as a key crop in Vietnam. In particular, according to the criteria of the International Cocoa Organization (ICCO), Vietnamese cocoa beans have the second best quality in Asia.

Vietnam's cocoa exports

“Taking advantage of the high price, Vietnam is facing a “golden opportunity” to revive cocoa growing areas. In the context of tight global supply, the appearance of “made by Vietnam” cocoa products can be a bright spot in the global supply chain. In particular, with good quality, our country’s cocoa products can access many new markets, spread the value of Vietnamese goods around the world and create a new beginning for the industry’s future prospects,” Mr. Pham Quang Anh emphasized.

Source: https://congthuong.vn/thi-truong-ca-cao-the-gioi-dang-tao-nen-buoc-ngoat-moi-ky-nguyen-moi-306022.html