StoneX Senior Trader Vladimir Zientek explains cocoa’s latest price spike and the structural forces behind it.
Key Takeaways
Ivory Coast and Ghana shortfalls could create a sixth consecutive global cocoa deficit
Demand is only marginally weaker; chocolate remains “a bit inelastic” despite soaring costs
Tariff uncertainty is diverting beans toward London and adding fresh upside risk
Record Prices and the Prospect of a Sixth Deficit
“Up until … yesterday’s close, [there] was a $1,700 rally, almost a 20% rally in the span of four days”, Zientek notes, after New York futures burst back above the psychologically important $10,000 level. Early pod counts in Ivory Coast point to another undersized 2025-26 main crop, fuelling fears of a sixth straight global deficit.
West African Supply Squeeze
Between them, Ivory Coast and Ghana supply “about 60% of the world’s cocoa production”. Aging trees, disease, and oscillating El Niño/La Niña conditions have already cut Ivory Coast output by roughly half a million tonnes, while Ghana’s harvest fell from a record one million tonnes in 2020-21 to just 480,000 last year. Zientek warns that investment has focused on domestic processing capacity rather than farm productivity, leaving grinders short of quality beans.
Demand Proves Surprisingly Resilient
Earnings from Hershey, Mondelez and Barry Callebaut show volume declines. Hershey reported an “18% drop in North American demand”, yet Zientek argues cocoa is “a bit inelastic”. Even premium manufacturers are struggling to pass through the full price shock, but consumption has not fallen enough to offset the supply crunch.
Tariffs and Trade-Flow Realignment
Industry “doesn’t really want to pay $10,000 a tonne for cocoa”, and impending U.S. tariffs threaten a “double whammy”. With the New York–London arbitrage unattractive, traders are diverting Latin-American beans to London where delivery into the ICE contract avoids part of the levy. According to Zientek, current internal differentials would need to fall to by $1,500/-$1,600 to make U.S. imports viable, versus today’s $1,000/-$1,200.
Looking ahead, Zientek reminds viewers that “it takes between 3 to 5 years from a seedling to bear fruit”. Even if high prices spur new plantings in Ecuador, Brazil or Nigeria, meaningful relief is unlikely before the end of the decade.
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---- Expert: Vladimir Zientek, StoneX Senior Trader
Sugar
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