Cocoa market update: Has cocoa finally found its melting point?

So far in 2024, cocoa futures have risen 105% on the New York contract and 120% on the London contract (rolling second contract). We continue to see mammoth price moves, almost daily. Last February the New York contract surpassed the longstanding nominal record set in 1977, reaching USD 5,379/metric ton. Since then, prices doubled, with the July contract closing at USD 11,461/metric ton on the April 19.

However, there has been a recent correction, bringing prices down to around 8,600/metric ton. Of course, when prices reach such dizzying heights, the question on everybody’s lips is: where do we go from here? Well, the fundamentals are still very concerning. Systemic supply-side issues have led to a cocoa shortage that the market fears will not be quickly fixed. The primary underlying causes are low farmgate prices in West Africa and crop disease. Outside of fundamentals, technical factors have also contributed to the most recent price rise, with some commercials being forced to buy back their shorts at higher prices. Let’s see what has changed in Q1 2024, what do current prices mean for demand, and ultimately where next for cocoa prices?