Industry warns of cocoa price explosion as climate risks threaten global supply

The global cocoa market is expected to face a supply shortfall for the first time in three years, with Asia’s leading processor warning that climate risks could threaten production in major growing regions.

A strengthening El Niño weather pattern, characterized by unusually warm ocean surface temperatures in the central and eastern Pacific, could put additional pressure on cocoa production, according to forecasts from Malaysia-based cocoa processor Guan Chong Berhad cited by Bloomberg, as Caliber.Az reports.

The company expects a deficit of between 300,000 and 400,000 tons in the 2026-27 season, compared with a surplus of about 100,000 tons the previous year. The projected shortfall is expected to coincide with stabilizing demand, Guan Chong CEO Brandon Tay Hoe Lian said at an industry event in Singapore.

The outlook comes amid a volatile period for the cocoa market, which is on course to record a second consecutive annual surplus. That would follow three straight seasons of deficits caused by poor harvests in West Africa, the world’s main cocoa-growing region. The supply shortages drove New York cocoa futures to a record above $11,000 per ton in late 2024.

Prices have since fallen significantly from those levels but have begun rising again as new crop risks emerge. Cocoa farms in West Africa have been affected by excessive rainfall, with waterlogged fields and persistent humidity increasing the risk of disease and hindering pod development.

The threat could be further exacerbated by El Niño, which is known to intensify the region’s seasonal dry Harmattan winds, placing additional stress on cocoa trees.

Cocoa futures have risen for six consecutive months, reaching their highest level since October this week. The anticipated supply squeeze could fuel further gains, with Tay forecasting that futures may reach around $8,000 per ton by December, up from approximately $6,500 currently.

Côte d’Ivoire is the world’s largest cocoa producer, with other major producers including Ecuador and Brazil in South America, Ghana and Cameroon in Africa, and Indonesia in Asia.

By Nazrin Sadigova