Cocoa is breaking historical records. 7,000 on the horizon hole. per ton

Cocoa prices have been rising on world markets for basically two years. Recently, for the first time, raw material prices on American stock exchanges increased to over PLN 6.5 thousand. dollars, i.e. over 25.8 thousand PLN per tonne. The situation on European stock exchanges became more tense. In Great Britain, a tonne of this raw material costs almost PLN 5.8 thousand. pounds, i.e. 29.2 thousand zlotys. For almost 75 percent. The world's cocoa bean harvest is the responsibility of four countries – Côte d'Ivoire, Ghana, Cameroon and Nigeria, where extremely poor harvests were recorded, and this is the main reason for the current situation.

Wars and weather raise the prices of various products, including cocoa

– Countries in this region are struggling with the consequences of climate change, rising freight prices caused by the war in Yemen and Israel, as well as with fertilizer prices, which have increased after sanctions against Russia – says Dr. Piotr Arak, chief economist at VeloBank. – Producers need from 1.5 to 3 years to reduce the cocoa deficit. Additional investments were launched in Brazil and other South American countries in the fall. The global cocoa deficit may reach 375,000 this year. tons – adds the expert.

As a result, quotations on the New York Stock Exchange have increased by over 36% since the last local peak in the first half of December 2023, to reach a new record at the end of February – over 6.5 thousand. dollars per tonne. There are also voices that we may soon see another limit broken, this time $7,000 per tonne. This is what experts from UCE RESEARCH believe and point out that the situation is very dynamic. Too many problems have accumulated for prices to start slowing down. They have been growing for two years. It is also difficult to imagine that supplies from Africa will be easily replaced.

– Heat and drought threaten plantations due to the weather phenomenon called El Niño. And diseases of cocoa trees in Nigeria and Cameroon further deepen the problem of cocoa shortage on world markets – explains Dr. Joanna Wieprow from the WSB Merito University in Wrocław. – The World Cocoa Organization forecasts larger harvests in the coming years, but the constantly growing demand for cocoa, especially in China, suggests that a further increase in the prices of chocolate and other sweets is inevitable – emphasizes Dr. Wieprow.

Cocoa prices: are they already at their peak?

According to Grzegorz Rykaczewski, an analyst from Bank Pekao, it is difficult to say whether prices have already reached their peak. The improvement in sentiment is not supported by the fact that for the last two seasons on the global market, demand has exceeded supply, so inventories have decreased.

– The negative impact of high cocoa prices on confectionery producers will partially compensate for the decline in sugar prices. They are still at historically high levels. Their decline will therefore not be able to fully neutralize the increase in cocoa costs – adds the expert.

Cocoa is a key ingredient needed to produce chocolate. Price increases affect not only producers. It will also be felt by consumers. According to the monthly report entitled “PRICE INDEX IN RETAIL STORES”, in January this year. the prices of sweets and desserts increased by over 14% year on year. This can be seen, for example, in chocolate bars and wafers, which they increased by almost 22% respectively. and by over 16 percent

– These are items for which demand may drop in a relatively short time in the event of high prices. After all, these are not first-need products, and promoting a healthy lifestyle further supports eliminating them from the daily diet. However, due to the increasing price of the raw material, we may also experience price increases in other categories, such as cosmetics, medicines and supplements that are also based on cocoa – predicts Dr. Justyna Rybacka from the WSB Merito Gdynia University.

The Easter shopping peak is ahead of us

Analysts remind us that the upcoming Easter season, next to December, is the period of the greatest increase in sales of chocolate products. Strong increases in cocoa prices on global markets will be felt by food producers, processing plants, as well as confectioneries and restaurants. As a consequence, all these entities will pass on higher product costs to the final recipient, i.e. the ordinary consumer. There will be no other option. We will feel the first symptoms of this before Easter.

– Chocolate sweets and desserts will become more expensive in shopping baskets. We may also be dealing with the so-called shrinkflation, i.e. reducing the size of bars and chocolates or changing their compositions to ones that are cheaper for producers, without significant differences in the weight and volume of the products – warns Dr. Piotr Arak. In turn, experts from UCE RESEARCH claim that consumers will not immediately notice the differences. But over time they will become more and more visible.

– The cost of cocoa in a chocolate bar is from 5%. up to 7 percent its prices. Even if the prices of the raw material double, the product will become more expensive by the above-mentioned amount. ceiling – soothes the pessimistic moods Michel Arrion, executive director of the World Cocoa Organization. – If the price of the raw material increases, it will be an incentive for farmers to produce more cocoa and balance supply and demand. But it takes on average 4 or 5 years to ramp up production. This is how long it takes for a cocoa tree to bear fruit, explains the expert.

Piotr Bielski, director of the Economic Analysis Department of Santander Bank Polska, notes that although rising global prices of cocoa and sugar contribute to the increase in prices of sweets and desserts on the Polish market, the trend is at least partially inhibited by the strengthening exchange rate of the Polish zloty. – Nevertheless, if cocoa prices continue to rise, we should take into account an increase in the costs of purchasing sweets and desserts in Polish stores. The full impact on domestic retail prices may take at least six months, analyzes director Bielski.