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Cocoa Powder Crunch: Exploring the Recent Price and Demand Surge

Cocoa Powder Crunch: Exploring the Recent Price and Demand Surge

Summer is approaching ,and the temperatures are rising rapidly to uncomfortable levels. The global Cocoa Market is also experiencing a similar, yet much more astronomical, rise of Prices and Demands.

Climate Change effects on Cocoa Powder Production

70% of the World’s Cocoa production happens in two countries of the West Africa: Ghana & Ivory Coast. Due to the ongoing climate phenomenon of El Niño (a climate pattern characterised by warm ocean temperatures in the Pacific), unusually high rainfall followed by strong heat waves was observed in this region.This lead to:

  • Increase in diseases (Like Fungal Black Pod Disease and Swollen Shoot DIsease) in the Cocoa Plantations.
  • Disruption of Supply-chain due to road damages and bad weather
  • Sub-standard Cocoa pod production and lower yield

This has caused the lowest levels of production and supply of cocoa observed in this decade, causing severe Backwardation in the market.

Cocoa Powder Price Increase trends

Since Cocoa beans are the raw material for productions of Alkalized and Natural Cocoa Powder, the reduction in supply has caused a sudden increase in demand, causing drastic increase of Cocoa powder prices.

The rapid increase in prices was observed from the month of February, 2024. Since then, the average prices have increased by almost 70-80% of the average prices of the previous months.

This trend of increase in prices is expected to stay for a while, since yield from is expected around June-July, and the erratic climatic conditions are also projected to stay for a while.

Who gets hit the hardest?

Big players in the market can afford to ride the price crunch and stock up big quantities. But, this will still cause a price increase or change in product formulations to use less cocoa powder.
Smaller players like home bakers, small enterprises and start-ups may find it challenging to continue product lines that use cocoa powder.

In conclusion, the rapidly growing market of Cocoa Powder is facing a Climate Change Challenge particularly due to El Niño. The current trend of price increases is expected to persist until new cultivation yields become available. This may extend even further if the weather conditions are erratic in this cycle as well. The small enterprises are set to hit the hardest,and prices of products like chocolates and other applications are projected to increase.

Click here to explore our Cocoa Powder range.

Click here to read our Formulation Specialist’s take on the Cocoa Shortage.

Cocoa Powders (Natural & Alkalized)

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