Consumers may need to think twice before reaching for their third cup of coffee and second chocolate bar of the day. Coffee and cocoa prices have been rocketing this year, and they extended their gains during the Dec. 17 trading session.
March cocoa futures surged $168.00, or 1.43 percent, to a record $11,933 per metric ton on the U.S. ICE Futures exchange. Cocoa prices have advanced 184 percent this year.
March coffee futures rose $0.027, or 0.83 percent, to $3.2765 a pound. While coffee prices have eased from their all-time high registered earlier this month, they are up 74 percent year-to-date.
A Bittersweet Performance for Cocoa
Much of the world’s cocoa production originates in West Africa, predominantly Ghana and the Ivory Coast. The region, however, has suffered from three consecutive years of poor growing conditions.Farmers have endured poor crops caused by heavy rainfall, root rot, and prolonged drought. They have also experienced black pod disease, a fungal disease of cocoa trees that has decimated output levels and worsened global supply shortages.
ICE-monitored cocoa supplies held in U.S. ports have been shrinking for the past year, and recently slipped to a 15-year low.
Warren Patterson, the head of commodities strategy at ING, expects the global cocoa marketplace to shift from deficit to surplus. This trend, Patterson said, will be driven by a rebound in production and a possible continuation of sluggish demand.
Output is expected to climb 11 percent next year, and the stock-to-grinding ratio could be the second lowest since the 2008–09 marketing season.
Next year’s surplus is forecast to be a little more than 150 kilotons.
Still, sensitivity could best describe the worldwide cocoa market in the 2024–2025 marketing season, Patterson said.
“Firstly, there is the risk that poor weather (which we have been seeing recently) could quickly erode this surplus,” Patterson said in a research note last week. “Secondly, historically tight stocks are likely to keep the market very sensitive to any supply and demand developments.”
While higher consumer prices have yet to materialize, they could start to surge in 2025, says Celine Pannuti, the head of European staples and beverages at JPMorgan Chase.
Coffee Production Hit by Droughts, Floods
Droughts in Brazil and Vietnam, the world’s top-producing coffee markets, have triggered substantial price increases this year for both Arabica and Robusta.Arabica, used by brewers and coffee houses, is sensitive to its environment and requires cooler climates and regular rainfall. Robusta, mainly used for instant coffee, can tolerate different weather conditions and higher temperatures.
Drought has affected Brazil’s 2025–26 crop. The U.S. Department of Agriculture (USDA) recently trimmed its estimate for the country’s coffee output by 5 percent, to 66.4 million bags.
Brazil’s Arabica production is projected to grow by 1.1 percent, while its Robusta crop is expected to tumble by nearly 2 percent.
While the South American nation has witnessed rainfall over the last two months, experts say it might not be enough to alleviate the decline in Brazilian production.
“Tight coffee stocks and the persistent deficit environment are likely to keep the forward curve in backwardation. Prices are likely to remain volatile and elevated, at least until we get some further clarity on the 2025–26 Brazilian harvest,” Patterson said.
Financial research firm StoneX Intelligence is a bit more bearish on growth prospects.
In Vietnam, supplies have been just as tight as coffee fields were flooded, delaying the country’s harvest.
Legislative efforts in Europe paused coffee’s meteoric ascent. The European Parliament voted to delay the implementation of a deforestation regulation by one year. The rule would restrict the imports of products made in deforested regions after 2020.
The worldwide coffee market is on track to experience its fourth consecutive annual deficit. As the next marketing season approaches, it may face a fifth year of shortages unless production increases and demand decreases.
