Cocoa Prices Hit 46-Year High As Drought Concerns Threaten West African Crops

Cocoa prices climbed to a 46-year high this week in New York as concerns mount that seasonal Harmattan winds across West Africa could dry cocoa fields and reduce yields for the Ivory Coast's mid-crop in April. This would pressure global cocoa production even further. 

Bloomberg reports the most active cocoa futures jumped as much as 2.2% to $4,961 per ton in New York. Prices are up 126% since Sept. 2022, threatening to raise costs for the world's top chocolate makers, such as The Hershey Company.  

According to Donald Keeney, senior meteorologist at Maxar Technologies Inc., average temperatures across West Africa are 2 degrees Celsius above normal for the next few weeks. He said the region was "a lot drier and warmer than usual for the past month" and will continue this trend, adding that the Harmattan "is certainly a bit stronger than usual this year." 

Ivory Coast is the world's largest cocoa producer, and lower production has been a major bullish catalyst for soaring cocoa prices. 

On Monday, the Ivory Coast government said farmers shipped 1 MMT of cocoa to ports from October 1 to January 28, down 36% from the same period last year. 

A week ago, the Ivory Coast cocoa regulator, Le Conseil Cafe-Cacao, halted forward cocoa sales for the 2024/25 season due to sliding cocoa production. 

This has also fueled worries that the current level of cocoa production will be unable to restock supplies and prevent a worldwide shortfall of the bean, widely used in candy. 

Last month, Jonathan Parkman, the head of agricultural sales at Marex Group, warned: "I don't think we've seen the worst of the situation for consumers." He means the worst of 'candyflation' has yet to be realized.