Supply, demand and cycles

The lesson in full

Chocolate suddenly costs more. Chilli prices double before a holiday. Blame supply and demand, and the cycles they create.
When buyers want more than sellers can offer, prices rise. Before big holidays like Eid, Christmas or Diwali, demand for flights jumps, and so do fares.
Weather hits supply. El Niño droughts can cut palm oil, rice and coffee harvests, pushing prices up months later.
Real example: in 2024, bad weather and crop disease in West Africa sent cocoa to records above US$10,000 a tonne, roughly three times its price a year before. Chocolate makers raised prices worldwide.
Then the cycle turns. High prices push farmers and miners to produce more and buyers to use less. Supply catches up and prices fall: cocoa dropped a long way again in 2025.
Common mistake
Mistake: assuming a commodity at record highs will stay there. As traders say, “the cure for high prices is high prices”: they bring the supply that ends the boom.
Key takeaway
Commodities move in cycles: shortage, high prices, more supply, lower prices, less supply, repeat.

When demand is higher than supply, prices usually... RiseBuyers compete for limited goods, so sellers can charge more.
Why do flight prices rise before big holidays? Demand jumpsMany people want to travel at the same time, but seats are limited.
High prices tend to encourage... More productionHigher prices make producing more profitable, so supply grows over time.
What pushed cocoa to record prices in 2024? Poor harvests in West AfricaBad weather and disease cut supply from the region that grows most of the world's cocoa.