Cocoa trees are grown in areas within ten degrees to the north or south of the equator, a concentration which leaves little room for error within the supply chain. Among the issues for cocoa farmers, a few stand out as possible price movers.
Rainfall and Temperature - Cocoa trees are sensitive to soil water deficiency and dry spells that exceed three months can have a huge impact on yield. Trees respond best to relatively high temperatures with an ideal range between 18 to 32 degrees Celsius. Cocoa trees usually grow in the lower levels of a rainforest and shade is important for young trees.
Pests and Disease - Cocoa trees are susceptible to a host of issues including fungal diseases, insects, and rodents. Of these, the most common causes for concern include fungal diseases which cause the seed-bearing pod to rot - the oft mentioned black pod rot. Other commonly noted issues include swollen shoot virus, frosty pod rot, and cocoa pod borer. Pesticides and fungicides are the normal response to these issues. However, since many plantations are smallholdings in less developed nations, maintenance and care of trees can sometimes be cost-prohibitive.
Political and Social Issues - Since over one-third of global cocoa comes from Ivory Coast, the markets are ever watchful for any political or social unrest. Farmers and export workers have, in the past, blocked exports in protest of pay rates or conditions. A fractured or unsettled political division in a producing nation can also disrupt supply.
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