Cocoa prices have hit an unprecedented high, with May delivery contracts peaking at $10,080 per ton, a result of the most significant cocoa supply shortage in over six decades. This shortage, primarily due to issues in Ivory Coast and Ghana—which account for 60% of global cocoa production—stems from epidemics, the impact of El Nino, and a shift by farmers to more lucrative crops. The surge in prices, over three times in a year and a 129% increase since early 2024, is causing concern among major chocolate producers like Hershey, who are employing hedging strategies to mitigate cost impacts and maintain stable consumer prices. However, analysts predict unavoidable price increases and potential alterations in chocolate products, as panic buying and a disrupted trade regime further strain the supply chain, leading to shortages and higher costs for consumers.
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Original content
Cocoa contracts for May delivery rose to an all-time high of $10,080 per ton yesterday, before ending the day down 0.3% at $9,622. In one year, cocoa prices have more than tripled and increased 129% since the beginning of 2024. Although major chocolate companies have hedged their risks and not immediately passed on high input costs to consumers, the industry can only balance temporarily with cost reductions, according to Paul Joules, analyst Store goods at Rabobank. Hershey CEO Michele Buck told CNBC that the company has a hedging strategy to manage price volatility. The American Confectioners Association said it is working with retailers to "manage costs" and keep chocolate affordable for consumers. "The worst is yet to come," Joules said. Cocoa prices are likely to remain elevated in the near term as there is no fix to the systemic problems facing the market. Steve Wateridge, a world expert on cocoa, told Reuters that "the market needs a big demand cut to keep up with the drop ...
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