Cocoa futures settled at $9,764 per ton as the commodity faced challenges breaking past the key $10,000 resistance level. Prices remained relatively stable amid ongoing worries over the West African mid-crop harvest and persistent trade tariffs.
Contract prices in both London and New York have climbed significantly from their April 19 lows, buoyed by stronger-than-expected grinding data reported by major cocoa associations. However, European buyers remain cautious due to tariff-related market distortions. As the world’s largest consumer, producer, and chocolate exporter, the European Union’s cocoa imports—primarily sourced from West African countries such as Côte d’Ivoire, Ghana, Cameroon, Nigeria, and South American nations like Ecuador—play a crucial role in shaping global prices.
Nigeria’s Growing Role in Cocoa Production
Nigeria, heavily reliant on crude oil exports which make up 90% of its revenue, finds itself at a pivotal moment. The country is being urged to adopt modern cocoa farming practices to diversify its economy and reduce its dependence on oil, which faces uncertain prospects amid global shifts.
In 2024, Nigeria’s cocoa exports surged to N2.7 trillion—an impressive sevenfold increase—driven by stronger international demand and the naira’s depreciation in global markets. This growth highlights cocoa’s potential as a key diversification strategy for Africa’s most populous nation.
Despite this progress, Nigerian cocoa often faces quality-related discounts due to inconsistent farming standards, which continue to hamper its full market potential.
Impact of Weather and Farming Practices on Cocoa Supply
Sustainable and ethical farming regulations, such as the European Union Deforestation Regulation, have introduced new governance standards that the industry must meet. Core cocoa-producing regions in Ghana and Côte d’Ivoire are grappling with harsh weather, poor wages, and entrenched rural poverty, all of which have contributed to a supply deficit and price volatility.
The International Cocoa Organization (ICCO) reports that mid-crop prices for the 2024/25 season starting in April reached $8,787 per ton in London and $9,286 per ton in New York. These figures represent a sharp decline from the $12,000 per ton highs seen at the beginning of the year.
West African producers have expressed alarm over forecasted weak mid-crop yields, even as some signs of supply improvement have started to surface. With approximately five months left in the season, the ICCO has emphasized the urgent need for clarity and coordinated action across the cocoa value chain.
Challenges for West African Farmers and Market Dynamics
Farmers in West Africa face significant pressure, often forced to sell cocoa at low prices despite current market levels being relatively high compared to recent years. This results in extremely low farm gate prices that strain livelihoods.
The ICCO also highlighted the adverse effects of US trade tariffs, including a baseline 10% tariff applied across all countries, which has prompted calls from West African farming organizations for governments to relinquish control over the cocoa sector. These groups argue that a more independent industry could better respond to market forces and improve outcomes for producers.
In April, cocoa markets experienced notable declines during a broader commodities downturn. London prices fell 17%, from $8,747 to $7,332 per ton, while New York prices dropped 16%, from $9,286 to $7,800 per ton. However, a short-term suspension of additional US tariffs announced in late April provided some relief, though the baseline 10% tariff remains in effect.
