KANSAS CITY — The global cocoa meltdown of 2024 may have peaked with futures prices in April, but chocolate lovers are just beginning to experience its worsening effects.

Nearby December New York ICE cocoa bean futures ended the week of Sept. 20 at $7,658 per tonne, down from record highs trading near $12,000 per tonne earlier this year but still up 113% from prices a year ago. Cocoa bean futures have tripled since 2021, and the supply side shows little near-term relief in sight.

In its latest report dated Aug. 31, the International Cocoa Organization (ICCO) forecast 2023-24 world production at a deficit of 462,000 tonnes compared with demand, an eightfold increase from its revised 2022-23 deficit estimate. A poor harvest in West Africa, which provides almost 70% of global supply, was driven by adverse weather conditions, aging trees, pests, disease and gold mining that took land from cocoa farms. Overall, the stocks-to-grindings ratio was at a 45-year low.

“Chocolate manufacturers are struggling with soaring cocoa costs,” Julia Buech, senior analyst of consumer foods for RaboResearch, said in a recent report. “However, the full force of the cocoa crisis is yet to be felt on supermarket shelves.”

On the retail side, consumers already are paying more for chocolate in 2024 — in The Netherlands, grocery store prices for chocolate are up 40% over three years ago, and Dutch chocolate is 18% more expensive year over year — but that’s largely without cocoa priced in, according to RaboResearch. General inflation and higher costs for dairy, sugar, and energy have so far driven the change.

Many of the existing contracts between cocoa suppliers and manufacturers were hedged in early 2024, before cocoa prices exploded, meaning retail consumers have yet to see the worst.

“Due to the lag in the supply chain and existing contracts, the steepest price hikes are anticipated in the second half of 2024 and into 2025,” Buech warned.

That could send retail chocolate prices soaring another 30% or more in 2025 as manufacturers pass on costs to consumers, according to estimates. Chocolate lovers also should expect cost-shaving tactics such as shrinkflation, where package sizes are reduced, and ingredient substitutions — palm oil for cocoa butter, for example — that consumers historically have viewed as turnoffs. Those changes are likely to suppress demand in an industry that since 2021 has seen chocolate retail sales fall by as much as 6% in parts of Europe, where a majority of the world’s chocolate confectionery is produced.

“The chocolate sector is already facing a structural shift away from sweets, with volume sales declining in recent years,” Buech said. “The current crisis adds to the challenges, making a return to significant growth unlikely in the near future.”

In the long term, higher retail prices, changing consumer habits, and positive shifts in global cocoa supply could help rebalance the market — but manufacturers and shoppers looking for relief will need to be patient. It can take three to four years for new cocoa trees to begin producing beans, meaning new farm investment in West Africa and South America won’t lead to price relief anytime soon, while cocoa farmers also grapple with increasingly unpredictable variables like climate change and swollen shoot disease, the ICCO said.

Then there’s the EU Deforestation Regulation (EUDR), which takes full effect Jan. 1, 2025. The EUDR mandates that seven commodity products, including cocoa (the others are beef, coffee, palm oil, rubber, soy and wood) may not be sold in or exported from the European Union if sourced from regions engaged in deforestation or forest degradation. The world’s top two cocoa producers, the Ivory Coast and Ghana in West Africa, are highly exposed to the regulation, which also prohibits existing beans from being mixed with noncompliant beans beginning in 2025.