The 2025 Commodity Playbook: Highlights from Kwayga and Expana Webinar
By Mike McGrath - CEO of Kwayga and eSourcing Expert
In an era of unprecedented market volatility, the global commodity landscape presents ongoing challenges for supply chain professionals. Recognising the need for clarity and actionable strategies, Kwayga partnered with Expana to deliver the "2025 Commodity Playbook: Insights on Coffee, Sugar, and Cocoa for Smarter Sourcing" webinar. Designed specifically for supermarket buyers, the event provided a deeper understanding of critical market trends and explored effective sourcing strategies amidst turbulent conditions. Moderated by Kwayga’s CEO, Mike McGrath, the discussion featured expert insights from Expana’s Steve WATERIDGE on coffee and cocoa dynamics and Rodrigo Bermejo on the sugar markets.
Cocoa: A Market Under Pressure
Steve Wateridge began by analysing the cocoa market, which has been experiencing significant price volatility over the past 18 months. He highlighted structural issues in key producing regions, particularly Ivory Coast and Ghana, which account for the majority of global cocoa production. Swollen shoot disease and ageing tree stocks have diminished yields. Farmers also face challenges exacerbated by low farmgate prices and illegal gold mining encroaching on agricultural land.
Despite some improvements in crops outside West Africa, such as expected record harvests in countries like Cameroon and Ecuador, Steve warned that structural challenges in Ivory Coast and Ghana could lead to sustained tightness in supply.
“With the best will in the world, we're not gonna get sufficient production outside of those two countries to actually grow global supply. And if that doesn't happen, we're now in a situation where we cannot grow global demand. […] And that's gonna mean that prices have to stay at a high level for much, much longer.”, explained Steve.
He also noted that regulatory constraints, like the EU’s deforestation laws, may further limit production expansion.
Looking ahead, Steve predicted continued price volatility and stressed the importance of addressing long-term issues. He advised supermarket buyers to consider alternative sourcing options and cocoa butter substitutes, where feasible, to mitigate the impact of high prices.
“You don't have to use cocoa butter. There are alternatives from palm oil, from shea nuts. Now, there are limits to how much you can use and still call it a chocolate bar. Certainly, one easy way to use less cocoa is to maximise those limits, whether it is worth actually going over that boundary and then calling your product a chocolate-coated or chocolate-flavoured product rather than a real chocolate product.”, said Steve.
Coffee: Climate Change and Volatility
The coffee market has similarly faced disruption, with climate change significantly impacting supply in key producing regions. Steve highlighted Brazil’s recent frost and drought events, which have reduced production by millions of bags over the past four years. Compounding this issue, prolonged periods of suboptimal weather in Colombia, Vietnam, and Central America have led to lower yields and greater market instability.
Steve explained that low global stock levels make the coffee market particularly sensitive to any supply or demand changes. While a potential surplus could emerge if weather conditions normalise in 2025–26, ongoing climate unpredictability poses a major risk.
“We've basically had two years where we've been in balance, but that's not enough to keep the market in check because stocks are low and the market becomes volatile to any small change in perceptions of either supply and demand.”, mentioned Steve.
To adapt, buyers were encouraged to explore flexibility in their product offerings. Adjusting the blend of Arabica and Robusta based on market dynamics can help manage costs, although sustained high prices may limit this strategy. Steve also noted the potential for alternative coffee varieties to grow in niche markets, albeit at a higher production cost.
Sugar: Stability with Strategic Opportunities
In contrast to cocoa and coffee, Rodrigo Bermejo described a relatively stable outlook for the sugar market. Brazil and India, the world’s largest sugar producers, continue to dominate global supply. However, challenges such as droughts in Brazil and ethanol mandates in India have slightly reduced production and exports. Thailand, another major supplier, is expected to see modest recovery in its sugar output.
Global sugar stocks are trending down, yet trade flows remain stable, creating a price floor that is likely to prevent further price drops. In Europe, sugar production for 2024/25 has seen a slight increase compared to 2023/24, which suggests that trade flows should maintain their current balance.
Rodrigo forecasted a continued range-bound market in the short term, with potential buying opportunities emerging in mid-2025 as production ramps up in Brazil.
“We're saying that in Q4 24 the world is kind of balanced. And then Q1 25 is really the question. We have just above a half a million tons deficit. This is the inter-crop in Brazil. After that, the world is going to a balanced situation once again as in Q2 Brazil resumes production.”, explained Rodrigo.
He advised buyers to monitor trade flows and anticipate price shifts during periods of tighter supply, particularly in the first quarter of 2025 when Brazil enters its inter-crop season.
Looking Ahead
As 2025 approaches, the global commodity landscape remains fraught with challenges, from climate change to supply chain disruptions. To stay ahead, supermarket buyers need innovative tools and insights to navigate these complexities.
Kwayga’s AI-powered sourcing engine offers the solutions buyers need to streamline sourcing, optimise supplier relationships, and future-proof their supply chains. By leveraging data and technology, Kwayga empowers buyers to make smarter, faster decisions, ensuring resilience in their supply chains
Explore how Kwayga can help your business thrive in an unpredictable market. Book a demo today!
