Why Cocoa Prices Can Be Extremely High in 2024
Short of global supply cocoa
In 2024 starting from December 2023 to be precise, cocoa prices experienced a significant increase, driven by several key factors. Let's discuss is the several factor why cocoa prices have reached its all time highest price level this year:
1. Climate Change
Climate change has been a major factor affecting cocoa production worldwide. Extreme weather conditions, such as prolonged droughts or irregular rainfall, can damage cocoa crops. In West Africa, the largest cocoa-producing region in the world, climate change has significantly reduced yields and disrupted production as in Indonesia second largest cocoa supply were hit by the El Nino phenomenon where high temperatures struck for a long time even disrupted the rain cycle affecting cacao yield crop.
2. Supply Chain Disruptions
The COVID-19 pandemic has left a lasting impact on global supply chains especially increased logistics costs by air shipment or sea freight cargo. By 2020 to 2023 shipment logistic to global average increased by 200% and prices were not stabilizing in 2024 have disrupted the flow of cocoa from farmers to international markets. Although the pandemic has subsided, the ripple effects of these supply chain disruptions are still being felt affecting the availability of cocoa in global markets.
3. Rising Demand
As the global economy recovers post-pandemic, demand for cocoa has also surged significantly. Developing countries like China and India have shown increased consumption of chocolate and other cocoa-derived products. This rising demand has created an imbalance between supply and demand, ultimately driving prices up.
4. Geopolitical Factors
Political instability in cocoa-producing countries, particularly in West Africa, has added pressure on prices where ghana and ivory coast as large supplie of cocoa located in Africa were affected. Internal conflicts and political uncertainty can disrupt cocoa production and exports. This creates concerns among market players, leading to price increases as a response to potential supply risks.
5. Commodity Market Speculation
Commodity markets, including cocoa, are heavily influenced by speculative activity. Investors speculating on potential price increases due to production uncertainties or supply disruptions tend to buy in large quantities, which in turn drives up cocoa prices. In 2024, this market speculation has exacerbated the rise in cocoa prices.
Conclusion
The rise in cocoa prices in 2024 is the result of a combination of various factors, including climate change, supply chain disruptions, rising demand, geopolitical instability, and market speculation. These conditions have created a complex situation where cocoa supply cannot keep up with the increasing demand, causing prices to surge to unprecedented levels. Addressing these challenges Rahat Sinergi ready supply the world with finest cocoa powder to fight cocoa price increase, if you have any inquire for cocoa powder, palm sugar, and robusta coffee contact us and we always ready to supply.