A chocolate shortage is on the horizon as cocoa prices surge to an all-time high, reaching record levels with a 2.1% increase to close at 4,757 pounds per ton. The world cocoa prices have spiked for the ninth consecutive day, creating panic in the supply industry. Shortages are anticipated to continue as a result of extreme weather and disease affecting cocoa plants in West Africa. The price hikes are causing concern for manufacturers, who are now passing the increase on to consumers, which could affect Valentine’s Day chocolate inventories. Last Friday, New York benchmark ICE cocoa futures peaked at $6,030 a ton, nearly doubling since the start of last year.
As a result of the price surges and prolonged supply issues, a Reuters cocoa poll foreshadows a global deficit of 375,000 tons in the 2023/24 season. This marks the third continuous deficit for the cocoa market. The price surge in cocoa is now filtering through to retail shelves, with the Hershey Company expecting a slowdown in product demand from cost-conscious customers after suffering a 6.6% decrease in sales volumes in the fourth quarter. The upsurge is expected to limit earnings growth for Hershey and Mondelez, with shares down by 30% and volumes also falling for the latter in the last quarter.
Jim Roemer, meteorologist and commodity trading advisor at Best Weather Inc., predicts that previous price hikes have been followed by a significant 20-50% price break, but the current situation looks to be different, with a continued squeeze anticipated for another month or two.