Cocoa Prices Crash After Record Highs
Global cocoa prices have crashed dramatically following a slump in chocolate demand. The sharp reversal from 2024's peak prices offers potential relief for food and beverage procurement, particularly for dessert and beverage programs in the hospitality sector.
The 2024 price surge saw cocoa futures soar above $12,000 per tonne, a dramatic spike from a historical average of around $2,500 per tonne. This unprecedented rally was driven by severe supply shortages in West Africa, where countries like Côte d'Ivoire and Ghana, which produce over 60% of the world's cocoa, faced poor harvests. Factors contributing to the constrained supply included erratic weather patterns linked to climate change, with periods of intense rain followed by drought, and the spread of diseases like black pod and swollen shoot virus. The International Cocoa Organization (ICCO) reported a supply deficit of 439,000 tonnes for the 2023/24 season, critically tightening global inventories. The subsequent crash has been sharp, with prices falling below $8,000/tonne by August 2025 and dipping toward $3,000 per tonne in early 2026. This reversal is largely attributed to significant demand destruction, as chocolate manufacturers and consumers balked at record-high prices. Key indicators of this demand slump include a sharp decline in cocoa grindings—a measure of processing activity. In the second quarter of 2025, grindings fell 7.2% year-over-year in Europe, 16% in Asia, and 2.8% in North America, confirming that higher costs were throttling industrial use. On the supply side, conditions are improving. Favorable weather in West Africa is boosting forecasts for the 2025/2026 season, with the ICCO now projecting the first supply surplus in four years for 2024/25. Analysts now project a global surplus of 287,000 MT for the 2025/26 season. Despite the crash in futures markets, retail chocolate prices have not fallen in tandem. Manufacturers are using the lower commodity costs to repair margins squeezed during the price spike, and many are locked into higher-priced inventory due to their hedging strategies. Looking ahead, while the extreme volatility has subsided, analysts expect prices to remain structurally higher than pre-2023 levels. J.P. Morgan suggests a medium-term price forecast around $6,000 per tonne as the market finds a new balance, indicating that long-term supply chain planning should account for a higher cost base than in the past.
