"They Boasted About Outperforming Crypto, But Cocoa Prices Halved in an Instant"

WSJ: "Cocoa Outperformed Bitcoin in Returns"
Soaring Cocoa Prices Plummet
Demand Drops Due to Product Price Hikes
Supply Surges in Producing Regions, Prices Halved

The price of cocoa, which had been soaring, has hit its lowest point in 20 months. This drop is attributed to a decline in demand following successive price hikes for chocolate products, as well as an increase in supply from West Africa, a major cocoa-producing region.

According to food industry statistics released on October 11, the international cocoa futures price on the New York Board of Trade (NYBOT) closed at $5,945 per ton on October 9. After rising to around $12,000 per ton at the end of last year, the price has been cut in half. The average price for this month stands at $6,250.4, the lowest in 20 months since February 2023, when it was $5,744.7.

Earlier this year, snack manufacturers collectively raised consumer prices in response to increases in raw material costs such as chocolate. Asia Economy Database.

Earlier this year, cocoa prices surged as West Africa, which accounts for over 60% of global production, experienced extreme heat, drought, and pest infestations. At the time, The Wall Street Journal noted that "cocoa outperformed Bitcoin in terms of returns." Not only domestic companies such as Lotte Wellfood, Orion, and Haitai Confectionery, but also global giants like Mars and Hershey, raised the prices of their chocolate products one after another.

Reuters Yonhap News

The sharp decline in cocoa prices is due to both a drop in consumer demand caused by higher prices and an easing of supply shortages as weather conditions in West Africa improved. Additionally, the governments of C?te d'Ivoire and Ghana, the main cocoa-producing countries, contributed to increased supply by raising the minimum guaranteed price of cocoa to protect farmers. The Financial Times reported, "The dramatic surge in cocoa prices that pressured chocolate manufacturers worldwide has come to an end," and added, "Recently, speculators have also been betting on a drop in cocoa prices."

There are projections that the downward trend in cocoa prices will continue until early next year. However, most experts do not expect prices to return to pre-2023 levels of $2,000 to $3,000 per ton. In the mid- to long-term, a decline in cocoa production due to climate change is considered inevitable. At the European Cocoa Forum held last month, it was suggested that 35% of the cocoa currently produced by C?te d'Ivoire could disappear by 2050.