The writer is the founder and chief investment officer of Andurand Capital Management The outlook for cocoa beans offers unwelcome tidings for chocolate makers hoping prices are on the retreat. After an explosive rally in the first four months of the year, prices have cooled somewhat. Having started the year at about $4,400 per tonne, cocoa beans futures prices peaked at $12,000 in April — well above the inflation-adjusted decade average of $3,400. Yet by May, prices plummeted to $7,000 a tonne.
New deforestation laws have discouraged farmers from expanding plantations, while a global fertiliser shortage, exacerbated by Russia’s war in Ukraine, has led to lower usage rates. West Africa is also grappling with an ageing tree stock and the spread of the cocoa swollen shoot virus. The virus has long been recognised as a production killer. Once symptoms appear, trees generally die within four years with yields significantly affected from the first year.