Will the Global Cocoa deficit continue in the 2024/25 season?

Cocoa has emerged as the most bullish commodity of 2024, with prices skyrocketing to unprecedented levels, more than doubling over the year. This dramatic rally is primarily driven by a severe global supply deficit, marking the largest shortfall in over six decades. The deficit stems from adverse weather conditions in major cocoa-producing regions like C?te d’Ivoire and Ghana, which have significantly impacted production.

2024/25 Season Overview

Looking ahead to the 2024/25 season, global cocoa production is projected to reach 4.86MMT, a notable 10% increase compared to the previous season. This improvement is attributed to favorable weather conditions during the main crop’s development. However, despite this recovery, production remains below the global average, with a 6% deficit compared to the typical range of 5.0MMT to 5.2MMT.

Key challenges continue to weigh on production, including:

• Cacao Swollen Shoot Virus (CSSDV): This persistent issue is expected to have long-term effects on yields.
• Aging Cocoa Trees: Reduced productivity from older plantations.
• Adverse Weather: Ongoing dryness and rising temperatures are raising concerns about the late main crop and the upcoming mid-crop development.

Supply and Demand Dynamics

While production shows slight improvement, robust demand is keeping the market tight. Grinding demand experienced only a minor decline, contrasting sharply with the steep drop in production during the 2023/24 season. This imbalance has resulted in a projected supply deficit of 184,000 metric tons for the 2024/25 season, further tightening the market.

Global cocoa ending stocks are forecasted at 917,000 metric tons for 2024/25, reflecting a significant 19% year-on-year reduction. This drop underscores the strain on supply amid resilient demand.

Key Takeaways

• Record Prices: Cocoa prices have surged, driven by a historic supply deficit and firm demand.
• Production Challenges: Despite a 10% production recovery, levels remain below average due to climatic issues & long-term CSSDV impact.
• Tight Stocks: Ending stocks are at critically low levels, intensifying market pressure.

As the cocoa market navigates through these challenges, stakeholders across the value chain from producers to processors and traders must brace for continued volatility. With long-term factors like climate change and disease impacting production, the cocoa market’s trajectory will be one to watch closely.

Will the cocoa prices rally? How do you see it impacting the global chocolate and confectionery industries shortly? Share your insights in the comments below.

Connect with an Expert for in-depth analytics on Cocoa production and price outlooks for next quarter. Our detailed quarterly report at www.transgraph.net covers all the details of the price drivers and a mid-term outlook.