Floods in West Africa send cocoa prices to near-record highs

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

The biggest impact on the increase in cocoa prices is due to very weak harvests in Côte d'Ivoire (the largest producer in the world), where a quarter of the population relies on cultivating this raw material. Government data published at the beginning of the week showed that farmers sent only 12,960 tons of cocoa to ports in the first six days of October, which is a decrease of 50,138 tons compared to the same period last year.

Also 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 tons this season, the lowest level in 13 years.

Not only West Africa is struggling 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 about 20 percent.

The International Sugar Organization (ISO) forecasts a deficit of 3.58 million tons in the upcoming season, meaning 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 significant cocoa producer, intense rains are 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 $5.

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

West African countries are also experiencing the problem of deforestation, associated with 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 seedlings 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 higher production cost increases.