Cocoa prices expected to decrease, but market volatility to persist

Global cocoa production faced a significant decline over the past year, resulting in record-high cocoa prices that have been impacting the chocolate industry. The dip in production was primarily seen in key cocoa-producing countries like Côte d’Ivoire and Ghana, where adverse weather conditions and diseases like brown rot fungal disease hampered output. In addition to these challenges, the cocoa sector has had to grapple with the aftermath of the Covid pandemic, leading to port congestion, shipping delays, and increased fuel costs.

According to agricultural commodities strategist Tracey Allen, the cocoa market suffers from a disparity where growers receive minimal returns despite producing a high-value crop. This has led to low rates of replanting diseased trees, making West African yields susceptible to weather-related fluctuations. As a result of these factors, cocoa prices skyrocketed, reaching above $10,000 per metric tonne.

On a positive note, cocoa supply is expected to improve in 2025 with estimates suggesting a global output increase of 8% year-on-year. The Ivory Coast has witnessed a 14% rise in cocoa arrivals at ports, although the upcoming mid-crop harvest is predicted to fall short of historical averages. Ghana and Ecuador are also anticipated to see growth in their cocoa output, highlighting a positive trend for the industry.

Despite the current easing of cocoa prices due to improved harvests and reduced demand, the market remains significantly different from its state a few years ago, as highlighted by Mike Navarro, Managing Director at Gnaw. Facing industry challenges, Gnaw took the bold step of shifting its cocoa sourcing to Colombia to ensure ethical and traceable supply chains. This decision aligns with Colombia’s efforts to promote agroforestry-based cocoa production as a means of addressing deforestation issues in the region.

Gnaw’s strategic sourcing move paid off, allowing the company to maintain a competitive edge in the market despite facing immense pressures. The business underwent a comprehensive reevaluation of its operations, emphasizing sustainability, range expansion, and quality enhancement. While some businesses explored cocoa alternatives in response to supply chain constraints, others like Ohly have focused on enhancing chocolate flavor profiles using speciality ingredients like yeast extracts.

Yeast extracts can complement cocoa in recipes by amplifying rich chocolate flavors while reducing the overall cocoa content. By leveraging yeast extracts, manufacturers can achieve multi-dimensional taste experiences that cater to evolving consumer preferences. These extracts can help restore richness and mouthfeel lost when cocoa content is reduced, making them a valuable solution for businesses navigating the volatile cocoa market landscape.