High prices and low inventory drag down cocoa processing volumes in Europe and Asia in the fourth quarter to a new four-year low.

In the fourth quarter of 2024, cocoa processing in Europe and Asia dropped to the lowest level in four years, sending the strongest signal so far that chocolate producers are struggling to cope with record high prices and low inventory. Data released on Thursday showed that in the fourth quarter of last year, cocoa processing in Europe fell by 4.5% compared to the previous year, while in Asia it fell by 0.5%. Cocoa processing in both regions in the fourth quarter was the lowest since 2020, when the pandemic and trade disruptions hit chocolate production. Last year, cocoa prices nearly doubled, becoming one of the best-performing major commodities, due to continued supply shortages in the world's largest cocoa producing countries, Ivory Coast and Ghana, leading to the largest supply gap ever. This prompted chocolate producers to reduce the use of cocoa in their products while using up their inventories to meet strong market demand. Furthermore, the latest data shows that Europe, as the world's largest chocolate consumption market, saw cocoa processing decline for the second consecutive year. While these data have long been seen as indicators of demand prospects, concerns are mounting that supply shortages may be distorting the data, making it increasingly difficult to gauge to what extent these figures reflect actual demand.