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Cocoa's sweet victory: Beating Bitcoin to the top in 2024

By isabelle // 2025-01-03

• Cocoa has outperformed Bitcoin in 2024 to become the best-performing commodity.
• Weather disruptions and soil degradation in West Africa are driving up cocoa prices.
• Global cocoa supply deficits have risen to their highest levels in 60 years.
• Experts predict cocoa prices will remain high in 2025 due to ongoing supply issues.
• Major chocolate brands are passing rising cocoa costs onto consumers.

Cocoa, the humble bean at the heart of our beloved chocolate, has had an extraordinary year. In a remarkable turn of events, cocoa has outperformed the ever-popular cryptocurrency Bitcoin to become the best-performing commodity of 2024, according to Bloomberg, with data from Trading Economics indicating that cocoa futures went from trading at around $4,000 per tonne in early January to a peak of $12,700 in the middle of December. As cocoa prices have almost tripled since the beginning of the year, reaching an unprecedented high, it's clear that this simple ingredient is making waves in the financial world. The surge in cocoa prices can be attributed to a perfect storm of factors, primarily centered around production disruptions in West Africa, the world's largest cocoa growing region. Severe drought and extreme weather conditions have taken a toll on cocoa harvests, exacerbating an already concerning trend in global cocoa supply. The world's top producers, Ivory Coast and Ghana, have seen their crops suffer due to record-breaking temperatures and inadequate rainfall. To make matters worse, fertilizer shortages have further limited crop yields, pushing prices to new heights. It's not just the weather that's affecting cocoa production; the broader issue of soil degradation in West Africa is taking its toll. With over two-thirds of the region's land degraded and fertilizer application rates lagging behind global averages, the outlook for future production remains grim. As a result, cocoa deficits have risen dramatically, reaching their highest level in 60 years and further driving up prices. Given the current supply challenges, experts predict that cocoa prices will likely remain at historically high levels in 2025. Ongoing disruptions in West Africa and the global fertilizer market are expected to continue exerting upward pressure on cocoa prices. This suggests that the current bull market for cocoa is far from over, and with no signs of supply catching up to demand, the future looks bright – or rather, sweet – for cocoa investors.

Why 2025 could be another record-breaking year for cocoa

As we look ahead to 2025, it's evident that cocoa's high prices are here to stay. The global cocoa market is struggling with one of the largest supply deficits in decades, and there's little reason to believe that production will improve anytime soon. This means that cocoa prices are likely to remain elevated, making it a prime investment opportunity. Furthermore, the growing concerns about soil health in West Africa suggest that cocoa production might face even greater challenges in the coming years. With no immediate solution on the horizon for improving soil quality and fertilizer availability, it's clear that the pressure on cocoa supply will continue to mount. The global chocolate industry, facing rising costs, is already feeling the pinch. Major chocolate brands have been forced to pass these costs onto consumers, leading to price hikes across the board. This trend is likely to continue in 2025 as the demand for chocolate remains high and supply constraints persist. Although cocoa's impressive performance in 2024 has beaten even the soaring Bitcoin, its future looks equally bright. With ongoing supply challenges and a robust demand for chocolate, cocoa is set to remain one of the top-performing commodities in the coming year. So, whether you're a die-hard chocolate lover or an astute investor, the future of cocoa is promising to be as sweet as ever. Sources for this article include: RT.com MarketWatch.com CNBCTV18.com

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