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The price of cocoa beans has soared to an all-time high due to low harvests caused by droughts in West Africa, which produces the majority of global supply.
Benchmark cocoa futures for March delivery on the Intercontinental Exchange (ICE) in New York briefly spiked above $6,000 per metric ton in intraday trading on Friday before later easing to trade at around $5,880 per ton, still way above the previous record high of $5,379 set in 1977. Cocoa prices have roughly doubled since the start of last year.
Experts attribute the spike to poor crops in Cote d’Ivoire and Ghana, the countries together responsible for two-thirds of the world’s cocoa beans. Both countries have been struggling with extreme weather changes and cocoa pod diseases for months.
Shipments of cocoa from Cote d’Ivoire were down by roughly 39% from the previous year over the period of October 2023 to February 2024, at 1.04 million metric tons, Euronews reported. Exports from Ghana also plunged by some 35% to 341,000 metric tons during the period of September 2023 through January 2024. A Reuters cocoa poll last week projected the global cocoa bean deficit reaching 375,000 tons in the current agricultural season.
Industry analysts note that bean costs are likely to keep growing due to the threat to global supply posed by the weather phenomenon El Nino, which caused draughts in West Africa during the third quarter of 2023, and is expected to continue at least until April.
Chocolate manufacturers have been warning that rising cocoa bean costs may force them to pass on the changes to consumers. On an earnings call on Thursday, the CEO of US candy giant Hershey, Michele Buck, said she expects “historic cocoa prices” to limit earnings growth in 2024 and translate into price rises on products.
“We will be using every tool in our toolbox, including pricing, as a way to manage the business,” Buck stated. The company Mondelez, the owner of candy maker Cadbury, last month also warned that it would be hiking prices as a “last resort” to manage costs. Earlier this week, the head of the European Cocoa Association, Paul Davis, warned that the global cocoa market is likely to remain tight for another 18 months to three years.
“We’ve got headwinds all over the place at the moment. Very expensive fertilizers, tough conditions for farmers, tough conditions for consumers… We are in a very tight balance. There is no cavalry that’s coming to the rescue,” he stated, as cited by the Business Insider.