Due to heavy demand and weak supply, cocoa prices are continuously increasing, which will have a direct impact on chocolate and coffee. Experts believe that at present the cocoa industry is in crisis which may impact the demand.
If you are also fond of eating chocolate or drinking coffee, then this news may shock you. Actually, there is a big threat to your favorite chocolate and coffee, due to which you may soon have to pay a heavy price for it. Due to heavy demand and weak supply, cocoa prices are continuously increasing, which will have a direct impact on chocolate and coffee. Experts believe that at present the cocoa industry is in crisis which may impact the demand.
Prices are continuously increasing
According to the report of Economic Times, this is because the prices of cocoa, coffee, palm oil and sugar have increased in the last quarter. At present the prices of cocoa and coffee are at all time high. The price of palm oil has also increased by 10% on an annual basis. The reason behind this sharp increase in cocoa prices is said to be concern about the supply from Ivory Coast, the world’s largest cocoa producer. This situation has become more serious due to adverse weather in West Africa, due to which there is a possibility of reduced crop yield.
Cocoa prices have seen a 40% increase since the beginning of the year, reaching their highest in more than a decade. Cocoa prices have increased to a record of more than $ 10,000 per ton. Cocoa prices have doubled in the January-March quarter compared to the previous quarter.
Industry is in crisis
Due to continuous increase in cocoa prices, chocolate manufacturing companies are stopping the production of milk chocolate. Also the prices of dark chocolate are increasing. Cocoa prices are at their highest level in 45 years. In just one year the prices of this commodity have increased by more than 150%. Whereas the price of cocoa butter is more than 300%. This is a very difficult time for cocoa farmers too, they are suffering huge losses due to the increase in demand and unprecedented reduction in supply.
These are the challenges facing the cocoa industry
- Increasing demand and decreasing supply of cocoa
- Cocoa trees take a year to produce cocoa
- Older trees produce less cocoa
- Production capacity is falling on most of the world’s cocoa plantations
- cocoa industry in crisis
- Chocolate manufacturing plants closing around the world
Where is cocoa produced?
- Every year cocoa farmers around the world produce about five million tons of cocoa beans.
- If we talk about the largest cocoa producers, then Côte d’Ivoire and Ghana are at the forefront, which produce about 60% of the worldwide cocoa production.
- After this comes Ecuador with 9%. Indonesia is the largest producer in Asia.
- Currently more than 70% of cocoa is cultivated in West Africa.
- There are 3 varieties of cocoa – Forastero, Criollo and Trinitario. Forestera is the most commonly available variety.
What is the condition of cocoa in the commodity market?
This week futures reached a record $11,126 per metric ton, a level that would have been previously unimaginable to most traders and almost double the previous peak set in the 1970s. Before this rally, the New York market had remained largely below $3,500 since the 1980s.
Citigroup Inc. expects prices to rise to $12,500 in the next few months. Andurand predicts that futures will break to $20,000 this year. A person familiar with the matter said earlier this month that the oil trader’s hedge fund had taken a small-sized long position in cocoa in early March.