Cocoa Tops Commodity Performers of 2024, Prices Expected to Stay High in 2025

Cocoa was the top-performing commodity of 2024, gaining 172% due to poor weather, weak harvests, and supply crunch in key producers like Ghana and Ivory Coast. Cocoa prices are expected to remain high into 2025, driven by weather risks and low global stocks. Meanwhile, coffee prices rose 67% due to drought conditions in Brazil, while coal and oil prices declined due to weaker demand in China.

Cocoa, the prized ingredient for chocolate production, emerged as the standout performer among commodities in 2024, with prices reaching an all-time high of $12,500 per tonne [1]. This remarkable surge represented a staggering 172% year-over-year increase, surpassing even the meteoric rise of Bitcoin [1].

Several factors contributed to the cocoa price boom. Adverse weather conditions and disease outbreaks in key producing countries like Ivory Coast and Ghana, responsible for approximately 70% of global cocoa output [1], significantly reduced overall production. Low global inventories, escalating cargo costs, and years of underinvestment in cocoa farming further exacerbated the supply crunch [1].

The 2023-24 cocoa season registered a supply deficit of 478,000 tonnes, the largest in over six decades [1]. This marked the third consecutive year of deficits in the global cocoa market, intensifying pressure on supply chains and driving up prices.

The soaring cost of cocoa has left a bitter taste for the chocolate industry. Leading brands are grappling with rising input costs and are increasingly passing the burden to consumers through price hikes on chocolate, cakes, and cocoa-based beverages [1]. Brands are also diversifying their product portfolios, pushing alternative flavors to counterbalance cocoa's cost challenges.

The vulnerabilities of agricultural commodities like cocoa to climate and market dynamics are becoming increasingly apparent. Stakeholders are calling for higher investment in sustainable farming practices to ensure future supply stability [1].

Meanwhile, coffee prices rose by 67% due to drought conditions in Brazil [2], while coal and oil prices declined due to weaker demand in China [3]. These contrasting price movements highlight the complexities and uncertainties of commodity markets.

References:

[1] "Cocoa tops commodities in 2024 with record gains, outpaces Bitcoin." CNBC TV18, 10 Dec. 2024, https://www.cnbctv18.com/market/commodities/cocoa-tops-commodities-in-2024-with-record-gains-outpaces-bitcoin-19528716.htm.

[2] "Coffee prices surge 67% in 2024 due to drought in Brazil." Reuters, 15 Jan. 2025, https://www.reuters.com/business/commodities/coffee-prices-surge-67-in-2024-due-to-drought-in-brazil-2025-01-15/.

[3] "China's coal, oil imports drop in November on demand easing." Reuters, 12 Dec. 2024, https://www.reuters.com/business/energy/chinas-coal-oil-imports-drop-in-november-on-demand-easing-2024-12-12/.