Floods in West Africa drive cocoa prices to record highs

Cocoa prices have been rising all week due to diminishing stocks. On Tuesday, at ports in the USA monitored by ICE (the company that operates the financial and commodity exchanges), stocks fell to their lowest level in 15 years, amounting to 1,998,398 bags, with even fewer by Friday.

The biggest impact on the rising cocoa prices stems from very weak harvests in Côte d'Ivoire (the largest producer in the world), where a quarter of the population relies on cultivating this commodity. Government data published at the beginning of the week showed that farmers sent only 13,000 tonnes of cocoa to ports in the first six days of October, a decrease of 50,000 tonnes compared to last year.

In Ghana, the second-largest cocoa producer in the world, smaller harvests than in previous years were already being forecasted in August. The forecasts indicate that they will amount to 650,000 tonnes this season, the lowest level in 13 years.

Not only West Africa is grappling with climate issues. In Brazil, prolonged droughts and fires, especially in the key sugar cane growing region of São Paulo, have led to an increase in sugar prices. Since mid-September, market prices have increased by approximately 20 percent.

The International Sugar Organization (ISO) forecasts a deficit of 3.6 million tonnes in the upcoming season, indicating that the days of cheap chocolate are behind us. Major producers admit that "global demand will continue to outstrip supply for a long time."

In Liberia, although not a major cocoa producer, intense rainfall is also affecting crops. This year, Liberia decided to produce chocolate from local beans themselves. The project was supported by President Joseph Boakai, who brought in instructors from Ghana to train local farmers. The first chocolate bars were produced at a promotional price of £4.

However, to ensure good quality, beans must meet specific moisture standards, and intense rainfall makes this difficult. Additionally, the country is struggling with the smuggling of cocoa into Sierra Leone and Côte d'Ivoire, where any quantity delivered is purchased.

West African countries are also experiencing the problem of deforestation related to cocoa farming. In Côte d'Ivoire, 90 percent of forests have been lost in 60 years. In Liberia, 15 percent of primary rainforests have been cleared for cocoa planting in 20 years, and this process is accelerating due to the growing demand for cocoa.

Experts predict that global cocoa stocks this season will be the lowest in 46 years, impacting chocolate prices. Despite earlier forecasts projecting a six percent increase in chocolate prices in the European Union, current weather conditions may lead to even greater rises in production costs.