Great news for chocolate lovers in South Africa

South Africans with a sweet tooth have had to suffer through some steep price hikes over the past year, but the tide may soon be turning as hopes rise that cocoa crop harvests will bring more supply to the market.

According to analysis from Bloomberg, this has led to a 6.2% drop in cocoa futures, extending drops of 5.2% in recent sessions.

Cocoa prices have shot up over the past three years as hotter weather in West Africa—one of the largest cocoa-producing regions in the world—caused crops to fail.

Prices surged to a record high of US$9,733/ tonne late in March 2024 and topped US$10,051/ tonne in April as inclement weather decimated yields in major production areas.

This has been reflected in local pricing as well, with data from Stats SA showing that prices have surged since 2021, rising 23.3% (above inflation of 17%).

Since the start of 2024, prices have risen 8.3%, and year-on-year, 12.8%.

Global cocoa prices hit a 46-year high in 2024 but have now dropped to $6,898/ tonne, which should bring relief to global price inflation, and spells good news for chocolate lovers.

“Better weather in West Africa is expected to help the region’s production partly recover from this season’s poor harvests that drove record prices and deficits,” Bloomberg said.

However, the analysts warned that futures are likely to remain above historical levels as other challenges like disease persist.

“The main crop is evolving quite well,” said Luca Zaramella, chief financial officer of Mondelez International Inc., the maker of Oreo cookies and Toblerone bars.

There are still “a few weeks to go, so we can’t declare that the crop is going to be good yet for sure, but all indicators are there.”

Bad news for coffee

While the prospects for chocolate lovers look better, coffee lovers are still sitting with some pain.

Coffee futures rose by as much as 3.2% to $4,861 a ton, as exchange stockpiles remain low and concerns over Vietnam’s output linger.

“Traders are also monitoring erratic weather in Brazil, where dryness has stressed coffee crops,” Bloomberg said.

Locally, the strain on global coffee can be seen in local inflation numbers, with tea and coffee inflation remaining elevated.

The price index for the category in July jumped sharply by 17.6%, up from 16.5% in June.

The largest annual price increases were recorded for instant coffee (up 21.8%), drinking chocolate (17.7%), black tea (15.7%), ground coffee and coffee beans (14.6%) and rooibos tea (11.1%).

Cappuccino sachets saw the lowest price increase in this category, rising by 7.6%.

The prospects for coffee and cocoa both hinge on the weather conditions in the regions that produce them.

Dry conditions in Brazil and Vietnam are threatening global coffee crops, with analysts warning that excessive dryness in Brazil may cause premature flowering of coffee trees and reduce yields for the country’s 2024/25 coffee crop.

Wetter weather in West Africa has already helped to push cocoa prices down, while incoming cold fronts to Brazil are likely to ease conditions for coffee.

More erratic and extreme weather patterns are emerging as the world continues to face climate change and shifting conditions.

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