Long-term factors such as climate change, crop diseases, and under-investment have led to poor harvests and low inventories, sustaining market volatility of cocoa prices. 

The cocoa industry is currently navigating a complex and volatile landscape shaped by fluctuating prices, supply constraints, and shifting market dynamics. Recent developments have significantly impacted both current market conditions and future outlooks, creating a challenging environment for stakeholders.

Over the past year, cocoa prices nearly tripled, reaching an unprecedented high of approximately US$12,000 per tonne. This surge was driven by a combination of adverse weather conditions, crop diseases, and chronic under-investment in West African cocoa farms, which collectively account for about 80 per cent of global cocoa production. Despite forecasts of improved harvests, production declines in recent years have left cocoa inventories critically low, sustaining elevated prices. Additionally, the rapid price increase has attracted speculative trading, further amplifying market volatility.

As of mid-January 2025, cocoa prices have shown signs of consolidation, hovering slightly above US$11,300 per tonne. While this indicates some stabilisation, prices remain well above historical averages, reflecting persistent supply concerns. From a technical perspective, cocoa prices are consolidating within a triangle formation on the daily chart, with immediate support at the 50-day moving average of US$10,173 per tonne. Regression analysis suggests that prices are likely to stabilise around the 23.6 per cent level of US$10,666 per tonne, based on trends from October 2024’s lows to December’s record highs.

Cocoa prices were projected to end January with a 4 per cent decline, signalling a slowdown but not a definitive loss of momentum. Prices remain highly sensitive to supply forecasts and geopolitical developments. For instance, concerns over slowing cocoa exports from Ivory Coast have supported prices by tightening global supplies. However, recent government data revealed a 24 per cent increase in cocoa shipments from Ivory Coast during the current harvest season (October 2024 to September 2025) compared to the previous year. This surge in exports contributed to a subsequent 5 per cent drop in prices.

Since November 2024, West Africa, particularly Ivory Coast, has faced a lack of rainfall and excessive heat, stalling the development of the mid-crop harvest. Production is expected to fall to 300,000 tonnes, significantly below the yearly average of 500,000 tonnes. This anticipated shortfall continues to underpin cocoa prices. Long-term challenges such as climate change, crop diseases, and under-investment in cocoa farming have further exacerbated poor harvests and low inventories, sustaining market volatility.

The persistently high cocoa prices have profound implications for the chocolate industry. Major chocolate manufacturers are likely to increase the use of fillers and artificial flavours to reduce cocoa content in their products. Coupled with expected price hikes, consumers may face smaller, less cocoa-rich chocolate products. Analysts predict that chocolate prices could rise by over 10 per cent in 2025, marking a steep increase compared to previous years.

Looking ahead, cocoa prices are expected to remain volatile. Further price increases are possible if adverse weather conditions persist in key growing regions. However, a price correction could occur if production in West Africa improves and global supply chains stabilise. Industry stakeholders must closely monitor these developments to effectively navigate the challenges and opportunities in this evolving market.