Cocoa

What it is

Cocoa (Theobroma cacao) is the tropical tree crop whose fermented and dried seeds (beans) supply the global chocolate industry. Côte d'Ivoire is the world's largest producer, accounting for roughly 45% of global output; Ghana is second at roughly 20%, with Indonesia a distant third. West Africa as a whole provides around two-thirds of global supply. An estimated 90-95% of cocoa is grown on smallholder plots of two to five hectares.

Pricing runs through two futures markets: ICE New York and ICE Europe in London. The International Cocoa Organization (ICCO), a United Nations-affiliated intergovernmental body headquartered in Abidjan, publishes the authoritative quarterly market balance. Ghana's COCOBOD and Côte d'Ivoire's Conseil Café-Cacao act as state marketing boards, setting or auctioning farm-gate prices each season before beans move to export.

History

Commercial cultivation accelerated through the colonial era. Ghana, then the Gold Coast, led global output into the mid-20th century before Côte d'Ivoire overtook it in the 1970s after the Ivorian government promoted large-scale planting. Global supply roughly quadrupled between 1960 and 2010, driven by Ivorian expansion and rising consumption across Asia.

A 2001 industry pledge, the Harkin-Engel Protocol, to eliminate child labor in West African cocoa by 2005 went unmet; subsequent deadlines in 2008 and 2010 were also missed. The issue remains a live regulatory and reputational liability, increasingly tied to EU and US market access conditions.

Current state

The 2023/24 season closed with a deficit of approximately 441,000 tonnes, the largest in more than 60 years. El Niño-linked drought, aging trees, and a surge of black pod rot and swollen shoot virus hit Côte d'Ivoire and Ghana simultaneously; Ghana's harvest fell to a 23-year low. Cocoa futures briefly reached US$12,000-13,000 per tonne in early 2025, a historic peak.

The 2024/25 season reversed sharply. ICCO's May 2026 Quarterly Bulletin of Cocoa Statistics recorded world production at 4.723 million tonnes (up 8.3% year-on-year) against grindings of 4.628 million tonnes (down 3.8%), yielding a modest surplus of 48,000 tonnes. End-of-season stocks stood at 1.32 million tonnes, giving a stocks-to-grindings ratio of 28.5%. Futures fell more than 30% from the 2025 peak. Both COCOBOD and the Conseil Café-Cacao cut farm-gate prices substantially for 2026, squeezing smallholder incomes.

The EU Deforestation Regulation (EUDR) requires full supply-chain traceability for cocoa entering EU markets. Its enforcement deadline has been extended but not cancelled, and building geo-tagged plot-level data for millions of farms remains a major operational challenge for West African exporters.

Relationships

Weather shocks are the primary external driver of cocoa markets. The 2023/24 crisis was amplified by El Niño conditions; the July 2026 floods in Côte d'Ivoire documented in 서아프리카 계절성 홍수, 코트디부아르 59명·가나 12명 사망…아비장 최악의 피해 illustrate the ongoing climate exposure of key growing regions. FAO tracks cocoa bean prices within its broader food commodity index at Wheat climbs a fourth straight month as cereals defy a stable headline index. Ghana covers COCOBOD's fiscal exposure and the foreign-exchange impact of cocoa revenues on Ghana's sovereign finances. Seasonal outlooks such as NOAA declares El Nino on June 11 as the Pacific moves from La Nina with Nino 3.4 reaching plus-1.7 degrees Celsius directly shape the crop forecasts that ICCO and COCOBOD use for pricing decisions.

What to watch

• Whether the 2024/25 surplus persists into 2025/26, or another weather shock tips the balance back to deficit
• EUDR enforcement timelines and how West African exporters build the required traceability infrastructure
• COCOBOD's forward-contract and credit liabilities, which tighten Ghana's fiscal space when cocoa revenues fall short
• Child and forced labor audits increasingly tied to EU and US import eligibility determinations
• Whether the 2025 price spike attracted enough replanting to structurally ease supply by 2027-28