Global Cocoa Stocks Hit Record Low... Alternatives Including Synthetic Chocolate Emerging

Cocoa Prices Hit 50-Year High Due to Poor Harvests in Major Producing Countries
Companies Seek Solutions by Reducing Cocoa Content and Other Measures

As global cocoa stocks, the raw material for chocolate, are running dangerously low, chocolate manufacturers are facing an emergency. Companies are preparing countermeasures such as raising the prices of chocolate products or turning to alternatives like synthetic chocolate.

On the 14th (local time), the Financial Times (FT) reported that cocoa stocks in major trading markets in New York, USA, and London, UK, have fallen to record lows. Available cocoa stocks in the Intercontinental Exchange (ICE) London market exceeded 100,000 tons just a year ago but have recently plummeted to around 21,000 tons over the past few months.

Chocolate. Pixabay

Jonathan Parkman of Marex, a commodity brokerage firm, said, "This is the smallest scale we have ever seen," adding, "Total stocks in New York's 'independent licensed warehouses' are only about 90,000 tons." Cocoa owners have stored surplus, relatively unpopular Cameroonian and Nigerian cocoa in exchange warehouses to fulfill futures contracts. However, as cocoa stocks dwindle, these quantities are also significantly decreasing.

The chocolate manufacturing industry, already under cost pressure due to rising cocoa prices, is suffering a double blow as cocoa stock levels also decline. Cocoa prices have nearly tripled since 2023 due to poor harvests in major producing countries such as C?te d'Ivoire and Ghana, reaching a 50-year high last December. Although prices have recently dropped by nearly 20% from their peak, supply issues remain unresolved. The International Cocoa Organization (ICCO) reported that from September 2023 to September last year, cocoa production in C?te d'Ivoire decreased by 22% compared to the same period the previous year. Ghana's cocoa production also fell by 27% during the same period.

Companies have responded by reducing the size of chocolate products or raising prices. According to investment bank Wells Fargo, chocolate retail prices in the US increased by up to 20% year-on-year during this Valentine's Day period. Companies are also reducing cocoa content or seeking alternatives such as synthetic chocolate. Unlike regular chocolate made from cocoa butter and cocoa liquor, synthetic chocolate is made from cocoa powder mixed with artificial fats. Raw material supplier Fuji Oil recently stated that while sales of industrial chocolate have declined, sales of alternatives have increased, with synthetic chocolate sales showing a notable upward trend.

Despite cocoa prices reaching record highs in international futures markets, some farmers in West African cocoa-producing countries C?te d'Ivoire and Ghana are abandoning cocoa cultivation. They are suffering from a triple hardship caused by worsening weather, government failures in supporting farms, and the spread of pests and diseases. According to the WSJ, cocoa prices on the New York futures market reached a record high of $12,565 per metric ton last month. The price increase for cocoa last year was 178%, surpassing Bitcoin's 122% surge.