West African cocoa harvests still weak, high prices may become the new normal.

date
04/08/2025
avatar
GMT Eight
Although the weather conditions have improved compared to the previous few harvesting seasons, structural issues such as aging trees and crop diseases may continue to limit cocoa production in West Africa and keep cocoa prices high.
As West Africa, the world's largest cocoa producing region, faces another disappointing harvest season. Despite improvements in weather conditions compared to previous harvest seasons, structural issues such as aging trees and crop diseases may continue to limit cocoa production and keep cocoa prices high. According to a survey of 8 traders and analysts, Ivory Coast, the world's largest cocoa producer, is expected to harvest 1.4 million tons of cocoa beans from October this year to March next year, which is in line with expectations. However, Ghana is facing a more dire outlook for the harvest season starting this month, with an expected harvest of only 620,000 tons of cocoa beans, far below its historical peak. This result means that global cocoa supply will continue to be tight, despite a slight relief in demand due to weak demand following an estimated shortage of around 40,000 tons in the global cocoa market this year. According to data from the International Cocoa Organization, the stocks-to-use ratio, a key indicator of supply and demand relationships, is currently close to the lowest level since 1981. In the US, cocoa stocks tracked by exchange-regulated warehouses are also significantly below the 10-year average level. Analyst Oran van Dort from Rabobank Netherlands said, "I don't believe cocoa production will recover significantly." He pointed out that after years of underinvestment, "the combined crop capacity of Ivory Coast and Ghana is increasingly likely to decline year by year." Cocoa supply shortages will place pressure on chocolate manufacturers and may keep cocoa and related product prices high. Although cocoa futures prices have fallen about 40% from a historical high of nearly $13,000 per ton in December last year, they are still far above the five-year average level. JPMorgan predicts that cocoa prices will remain above $6,000 per ton. JPMorgan strategist Tracey Allen said, "This market will continue to trade at elevated levels in the long term." She added, "Regardless of next year's supply-demand gap, we are not likely to return to the five-year average level quickly." Citi expects cocoa prices to reach $7,000 per ton next year, more than double the long-term average. The next three months are crucial in West Africa. After the rainy season from April to June, cocoa pods are now entering the peak growth and development stage. While abundant rainfall in June alleviated concerns before the dry season in July, according to analyst Emma Sanig from international investment bank Marex, if dry weather continues until August, the outlook may deteriorate again. Cameroon has become a bright spot in the West African region. According to the Cameroon Cocoa and Coffee Interprofessional Council, the country's cocoa production is expected to increase by 12% to 300,000 tons. But in other regions, the outlook is more bleak. For example, Nigeria's cocoa production for the 2025-26 season is expected to decrease by 11% to 305,000 tons, below the expected 344,000 tons. Mufutau Abolarinwa, chairman of the Nigeria Cocoa Association, said that changes in weather patterns have delayed crucial rainfall, while strong winds have damaged new flowers and young cocoa pods, reducing the number of pods available for production. Furthermore, even if cocoa production in West Africa recovers, it is starting from a lower base after experiencing two poor seasons. JPMorgan strategist Tracey Allen said that this will ultimately threaten West Africa's dominant position in the global cocoa market, especially as countries like Ecuador continue to expand their production capacity.