Cocoa price slightly decreases due to lower demand in the US

The cocoa price took a step down this week. In the United States, reduced demand and Trump's trade tariffs are causing uncertainty. Meanwhile, companies continue to find innovative ways to produce more chocolate with the same amount of cocoa beans. The price of cocoa decreased this week. This was particularly visible in London, where the price dropped by 3.8% on Tuesday, August 26, to $7,227.16 per ton. In New York, trading was more unstable. On August 21, the price fell from $7,675 to $7,435, then made a significant recovery on Monday, August 25. By the following day, Tuesday, August 26, the price was 1.8% lower than a week earlier, at $7,532 per ton. The price difference between the two markets has narrowed in recent weeks. Two weeks ago, the cocoa price in New York was 9.3% higher than in London. By Tuesday, August 26, this difference had decreased to 4%. Due to the instability, the differences are sometimes even smaller. A week earlier, the gap between the markets was only 2.2%. Demand and Trade Tariffs Due to the higher prices in the United States, producers are even more compelled than in Europe to raise their selling prices. Demand in the United States declined significantly less in the first half of the year compared to other parts of the world. In the US, demand decreased by 2.5%, as opposed to 3.2% in Europe and 3.7% in the Asian market. Investment bank J.P. Morgan predicts that prices will continue to rise. Consequently, demand in the US will be under greater pressure, while prices on different markets come closer together. In addition, the American trade tariffs lead to an artificial increase in cocoa prices. Cocoa is subject to a 15% duty, which, given the high price levels, results in a significant additional cost. This leads to further reduced demand, as consumer prices must rise further to offset the additional costs. For traders, there is also less room to pass on higher prices than in the European market, as the price level increases by 15% all at once. Innovation Accelerates Due to the high cocoa prices in recent years, companies are becoming more innovative. Normally, chocolate is made from fermented cocoa beans, leaving considerable volumes of cocoa pulp and other by-products unused. According to Nestlé, currently 70% of the fruit is not utilized. These raw materials are already being used on a small scale in products such as soft drinks, but Nestlé claims to have developed a method to also utilize them in chocolate production. By fermenting the pulp, a flavor similar to conventional chocolate is produced. The company expects to increase chocolate production by up to 30% from the same amount of cocoa.