If you’re a fan of mocha lattes or indulgent chocolate treats, 2025 might be a challenging year for your wallet. Coffee and cocoa, the commodities behind these beloved staples, have dominated the markets as two of the fastest-rising commodities for the second consecutive year. The tight supply of both crops led to volatile trading in 2024, with cocoa prices almost tripling. As we look ahead, the market forces driving this turbulence show no signs of abating.
One of the primary factors behind the sharp price swings is climate change. Cocoa and coffee thrive in tropical climates, which are increasingly affected by extreme weather events. Prolonged droughts, erratic rainfall, and rising temperatures are all taking their toll on crop yields. According to Bloomberg, companies like Starbucks are investing heavily in research to develop more resilient coffee bean varieties, while major cocoa players like Hershey’s are stockpiling beans to mitigate supply risks.
Analysts from ING predict continued tight markets for both commodities in 2025. There is a glimmer of hope, as cocoa bean supplies are expected to return to surplus after a deficit in 2024. However, the impacts of climate change make forecasting increasingly complex, and the industry is bracing for further disruptions (ING Report).
In addition to environmental challenges, geopolitical developments are adding to the uncertainty surrounding coffee and cocoa prices. Two key issues are particularly noteworthy:
Despite cocoa’s meteoric rise in the market, farmers in the top-producing countries of Côte d’Ivoire and Ghana are not reaping the benefits. These farmers are paid fixed rates for their crops by their governments, shielding them from market volatility but also preventing them from capitalising on price spikes. Adding to their woes are crop diseases and adverse weather conditions, which have significantly reduced yields. As The Wall Street Journal reports, some farmers are leaving the cocoa industry altogether, further straining global supply.
For consumers and businesses alike, navigating the coffee and chocolate markets in 2025 will require adaptability. Climate change, geopolitical policies, and supply chain disruptions are converging to create a perfect storm. While some companies are investing in long-term solutions like crop research and sustainable practices, others are taking immediate action through strategic stockpiling and diversification.
As we move through the year, keep an eye on developments in the EU’s deforestation law and US tariff policies, as well as updates from major commodity traders and agricultural analysts. These factors will play a pivotal role in shaping the market dynamics for two of the world’s most cherished commodities.
For businesses operating in the coffee and chocolate sectors, 2025 offers both challenges and opportunities. Adapting to the realities of climate change, understanding new regulatory environments, and anticipating geopolitical shifts will be critical to staying competitive. Whether you’re a consumer concerned about rising costs or an investor seeking opportunities in the commodities market, staying informed will be key to navigating the months ahead.
Sources: Bloomberg, ING, Reuters, The Wall Street Journal, The Wall Street Journal
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