BAKERY COMMODITIES
A Lookback on Bakery Commodity Markets in 2024 and an Early Glimpse into 2025
Jeff Gholson, SVP Procurement at Rise Baking Company
The bakery commodity markets have experienced significant fluctuations and trends in 2024, driven by factors such as global supply chains, consumer preferences, and economic conditions.
Cocoa and Chocolate Market Influences:
Cocoa and chocolate are essential ingredients in certain bakery industry categories, with their prices influenced by several bullish and bearish factors such as…
Bullish Factors:
• Cocoa stocks have declined for 17 months, reaching a 19-year low, signaling tighter supply conditions.
• The 2023/24 season saw significant reductions in cocoa arrivals from major producers like Côte d'Ivoire and Ghana, with Ghana experiencing a 36% year-on-year decrease.
• The International Cocoa Organization has increased the estimated deficit for the 2023/24 season, highlighting ongoing supply constraints.
• Industry cover has fallen to under six months, indicating weakened supply security.
• Market tightness is further reflected in rising bean differentials and special premiums, alongside increasing costs related to security and pre-financing.
• Cocoa grindings in North America and Asia have shown year-on-year increases, suggesting robust demand, despite recent hot, dry weather potentially affecting the upcoming mid-crop.
•West Africa's efforts to implement its own certification and declining bean quality due to more beans being required to make the same weight of cocoa add to the complexity.
Bearish Factors:
• A recent surge in cocoa shipments from Côte d'Ivoire, up 32% from the previous year, and promising yields from Ecuador.
• The Ivorian regulator has raised its cocoa production estimate for the 2024/25 season.
• The potential shift to super-compound coatings in 2025 and trends like shrinkflation may impact demand.
WHAT’S IN STORE | 2025
• Global demand is expected to fall by 10% in 2025, driven by significant anticipated price increases.
• Cocoa farmers in Ghana and Côte d'Ivoire are holding back cocoa in anticipation of higher prices.
• Although the chocolate category has seen a decline due to price increases, unit sales of chocolate candy have risen, with real increases expected later.
• European cocoa grindings have declined, while weather patterns, with El Niño weakening and La Niña forecasted, could benefit cocoa production.
Overall, cocoa and chocolate prices are likely to remain elevated well into the second half of 2025.
Wheat/Flour Market Overview:
The wheat market is currently influenced by a mix of geopolitical, climatic, and production-related factors. Long-range missile strikes from Ukraine into Russia have created uncertainties, impacting trade flows and prices. Russian export quotas are significantly lower this year, ranging from 9 to 12 million metric tons (MMT) compared to last year's 29.0 MMT. The Russian wheat area for the 2025 season is expected to be the lowest since 2018/19, with crop estimates lowered to 82.2 MMT from 83.8 MMT.
Argentina has also lowered its crop estimate to 18.8 MMT from 19.5 MMT, though it remains above the USDA's estimate of 17.5 MMT. France faces a particularly challenging year with its soft wheat crop expected to hit a 40-year low, contributing to a 30% year-on-year decline in EU soft wheat exports. The International Grains Council has trimmed its forecast for global wheat production, citing weaker EU output.
Despite these challenges, there are positive indicators. Russian exports remain solid, and prices have fallen. The U.S. has seen a significant 5% jump in good-to- excellent crop conditions over the past three weeks. Australia's wheat crop is looking notably larger, surpassing previous expectations. Additionally, China's approval of gene-edited wheat signals a shift towards greater acceptance of GMO technology, which could impact future production.
Overall, wheat/flour appear to have more upside risk than downside potential.
© 2025 International Dairy Deli Bakery Association
Bakery Commodities
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