1165. Soaring Cocoa and Coffee Prices

Recently, the international prices of cocoa and coffee have soared, and the influence of weather uncertainty due to climate change has been identified as behind this.
 

Prices for cocoa, the raw material for chocolate, hit a record high in April and briefly fell in September, but have risen again as concerns about West Africa's production, which accounts for more than 70% of global production, have reignited. In the 2023/24 season, the cocoa market experienced poor harvests in Côte d'Ivoire and Ghana, resulting in lower inventory ratios and higher prices. While the outlook for the 2024/25 season is improving, there are still concerns about weather developments in West Africa.

When it comes to coffee, over the past year, the price of Arabica has jumped by about 70% while the price of Robusta has doubled. Last week, the price of Arabica in the futures market surpassed a record, reaching its highest point in nearly 50 years, since 1977. Brazil is the largest producer of the world's most popular coffee beans, called Arabica, but Brazilian farmers faced the worst drought on record this year. Producers in Vietnam, the top growing country of the second most popular bean called Robusta, which is often used for instant coffee, also faced a severe drought, followed by heavier-than-usual rains.

The European Union's (EUDR) Deforestation Regulation (EUDR) was another layer of uncertainty facing the market. The regulation was supposed to come into force in December 2024, but the commission recently decided to postpone it for one year. Given that the EU is a major importer in the global coffee market, this regulation becomes important for coffee production and trade.

Contributor: IIYAMA Miyuki, Information Program