The price of cocoa is up by nearly 200% since July 2023, this time last year.....
It has quadrupled in the last two years...
According to this seemingly well informed blog from Chococo
This was initially due to bad weather affecting harvests in Ivory Coast and Ghana, who produce 40% and 20% of the world's cocoa respectively.
This has been exacerbated by ageing plantations where plants are more susceptible to disease and poorly managed estates more generally.
Add to this a currency crisis in Ghana which means they haven't been able to buy pesticides and you've got one hell of a terrible combination of adverse conditions.
All of this has led to lower crop yields and reduced supply.
To make matters worse many of the smaller farmers in Ghana and Ivory Coast aren't benefitting from these increased prices as they are locked into last year's prices having sold their crop at a locked in price previously. Some of them are smuggling their crops out on the black market.
All of this also makes it difficult for farmers to reinvest in new trees, which take years to mature.
Speculative short squeeze from traders.
Traders have more recently piled in and bet an astronomical $8 billion on cocoa prices continuing to go up.
And this not only increases the price it also makes it more volatile.
Little Luxuries...
I doubt the price of chocolate doubling will affect demand very much, as chocolate, like coffee, is one of those relatively cheap little luxuries which people can still afford even when times are tough.
So I imagine when these costs get passed on people will still be prepared to pay for their daily choco bar.
Investment lessons...?
I'm wondering whether it's worth having a punt on similar expensive but fragile crops going forwards.... avocados maybe? Or maybe that's a dangerous game seeing as that I know next to nothing about agricultural commodity markets!
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