Key information
- Cocoa prices reached a record high of $11.241 per tonne in New York on December 30, 2024.
- The price surge is due to climate change and supply shortages, with global cocoa production falling by 13.1 percent.
- Arabica coffee prices have risen 78 percent to a 50-year high of 321 cents per pound in New York by the end of 2024.
Global cocoa and coffee prices saw considerable increases in 2024, reaching 170 percent and 78 percent, respectively. These dramatic rises have outpaced the performance of financial assets such as bitcoin. The main factors behind this cost escalation are adverse weather conditions and geopolitical factors which have put pressure on both markets.
The price of cocoa has reached a record high of $11.241 per tonne in New York by December 30, 2024, due to the impact of climate change on cocoa-producing regions. Ivory Coast and Ghana, responsible for about 60 percent of global production, have faced heavy rains, strong winds and diseases such as shoot swelling virus, leading to a drop in yields. As a result, global cocoa production fell by 13.1 percent and end-of-season stocks fell by 26.8 percent. This supply shortage has intensified market volatility, pushing prices higher.
Impact on production and consumption
Despite rising costs, demand for cocoa has remained strong. The confectionery industry has adapted to the situation by reducing portion sizes or changing recipes. The traditional 100 gram chocolate bars have been replaced by smaller 75 and 60 gram versions. Some manufacturers have also started replacing cocoa butter with cheaper vegetable oils, while maintaining transparency for consumers.
The coffee market has also seen a surge, with Arabica prices reaching 50-year highs of 321 cents per pound in New York by the end of 2024, an increase of 78 percent per year. compared to January. Brazil, the world’s top coffee producer, has faced abnormal temperatures and drought, leading to reduced harvest forecasts and concerns about a potential shortage. These climatic factors were compounded by geopolitical issues such as disruptions in the Red Sea, which hampered transportation, and uncertainties over U.S. tariffs and new European regulations on deforestation.
Industry reaction and outlook
Coffee chains and producers have had to cope with increasing production costs. Some companies have raised prices to offset these growing expenses, while others have explored alternative solutions, such as reducing ingredient costs, to avoid passing the entire burden onto consumers.
Looking to 2025, the events of 2024 have highlighted the vulnerability of cocoa and coffee markets to climate events and geopolitical dynamics. Forecasts for the coming year are not optimistic and suggest a continued risk of price increases. Experts warn that consumers could end up with smaller chocolate bars and more expensive cups of coffee throughout 2025.
In response to this crisis, the industry is actively seeking innovative solutions. Producers are diversifying their sources of supply and investing in technologies to improve crop yields. However, price stabilization remains a distant goal, and 2025 could present new challenges.
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