After reaching a historic peak in 2024, cocoa prices have fallen sharply, signaling a possible shift in the global market cycle. The downturn is putting pressure across the entire value chain, from producers to processors.

The current slump in cocoa prices could mark the start of a prolonged new phase for the market, according to Edward George, an independent consultant and founder of Kleos Advisory, a firm specializing in African agricultural commodities.

Global prices have fallen sharply from their December 2024 record of $12,906 per metric ton on the New York exchange and are now trading around $3,000 per metric ton. The correction has had significant consequences for marketing systems in Côte d’Ivoire and Ghana, the world’s two largest cocoa producers.

Both countries have sharply cut farmgate prices — by 57% in Côte d’Ivoire and 28.6% in Ghana — in an effort to restart purchases of beans that have accumulated in producing regions. George believes the crisis is far from over.

“The cocoa market has clearly entered a new cycle. Last year, beans were scarce. Today, there is plenty of cocoa available. This is not the first time we have seen this. Similar cycles have occurred roughly every 10 to 15 years. Unfortunately, history is repeating itself, this time with a very heavy impact,” he said.

“We need structural changes”

Beyond the painful price correction driven by increased supply, George also points to weakening demand, particularly in major consuming markets.

“We are seeing a clear decline in cocoa grinding and usage in Europe, North America and Asia,” he said, noting a dual effect.

“Chocolate manufacturers are using less cocoa and developing alternative formulations, while the cost-of-living crisis is pushing households to cut back on confectionery purchases and eat out less often. According to the latest market estimates, a global surplus of around 200,000 metric tons is now expected, possibly more,” he said.

While supply chains in Ghana and Côte d’Ivoire have found some temporary relief, George warned that short-term adjustments will not be enough to manage the new market dynamics. Ghanaian authorities are already considering a new financing model based on domestic cocoa-backed bonds and have announced a target to process half of the harvest by the 2026/2027 season.

“The implementation of a new financing system will depend on the position of the central bank, the Ministry of Finance and Parliament. There is also a legacy of poorly managed fundraising operations, which makes markets wary,” George said.

More broadly, he argued that cocoa governance needs to be rethought not only in Ghana and Côte d’Ivoire but also in Cameroon and Nigeria — where markets are more open — if the sector is to better withstand future shocks.

“We need a structural transformation,” he said, highlighting the potential benefits of an African Cocoa Exchange (AfCX).

“The ICCO’s project to create an African Cocoa Exchange could play a key role by allowing prices paid to producers to better reflect local market conditions. Ghana and Côte d’Ivoire frequently stress the need to boost local processing, and here again an exchange could be decisive. Processors could turn to the platform to source beans when they cannot obtain them through traditional supply chains dominated by trading houses and multinational chocolate companies,” he said.

Espoir Olodo