Modeling Cocoa Futures Prices: A Statistical Analysis of Ghana’s Cocoa Production

Cocoa beans are a popular agricultural product and one of the fastest growing commodities of 2024 (Thukral and Tan, 2024). Most cocoa production comes from West Africa, with Ghana being an important producer. Since cocoa prices are sensitive to local and global factors, various stakeholders are interested in predicting prices. From producers to chocolate consumers, cocoa prices are impactful at multiple levels. Prices have been skyrocketing since late 2024 in the midst of a global cocoa shortage (J.P. Morgan, 2024). Climate change and weather patterns are key factors behind cocoa supply and pricing. Using cocoa futures price data from the International Cocoa Organization (ICCO), we will use time series methods to predict cocoa prices based on local climate, global demand, and economic measures. Our main objective is to build an accurate time series model of cocoa prices using predictors of local weather, cocoa demand, and exchange rate. We will compare a more traditional ARIMA model with a random forest model to determine which is most accurate and informative. Our key challenges are determining which potential predictors are most important, disaggregating predictor values, and ensuring model accuracy.

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