Soaring cocoa, coffee and tea prices might not stabilize until 2025

After the great post-pandemic inflation, most commodity prices retreated. But aficionados of some of the world's favourite legal stimulants have yet to feel any relief.

Volatile and unpredictable climate conditions, as well as potential supply-chain disruptions, have sent prices soaring for coffee, tea, and cocoa -- a set of agricultural foodstuffs often grouped together as the "tropical beverages."

Floods and droughts have been particularly damaging to tea crops in producing nations like India and Sri Lanka. And as we wrote earlier this year, cocoa production in Ivory Coast and Ghana (which account for over half the world's production) has been devastated by crop disease and poor weather.

Our first chart taps commodity price projections for 2024 and 2025 from the Hamburg World Economic Institute (Hamburgisches Weltwirtschaftsinstitut - HWWI). They estimate that tropical beverages will post a whopping cumulative increase of 43% this year, even as their index for food drops 6.5%. (Metals and minerals will also see their prices deflate this year.)

Next year, HWWI predicts tropical beverage prices will increase "only" by 3%, but this will still be faster than other commodity segments. (It should be noted that HWWI includes sugar in the "tropical beverages" category.)

Our second chart tracks these commodity categories over the past five years. HWWI data shows the inflationary surge of 2021-22 for most of the segments, but the tropical beverages trajectory stands out since 2023.

Our final chart breaks out daily coffee and cocoa and sugar prices since the start of the year. (We don't have daily prices for tea.) In April, cocoa prices skyrocketed to an all-time high of almost USD 12,000 per metric ton. But recently, better weather has raised hope of renewed supply; as of mid-September, cocoa futures had retreated to about USD 7,750 on the Intercontinental Exchange (ICE) in New York.

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