Cocoa prices hit a record high on Tuesday, driven by supply constraints that are pushing prices higher. Futures for May delivery were up 3.9% at $10,030 per metric ton, breaking above the $10,000 mark for the first time. Cocoa prices have surged nearly 138% this year, making it one of the best-performing commodities.
The surge in cocoa prices can be attributed to difficult weather conditions and disease affecting production in West Africa, which produces about 70% of the world’s cocoa. Ivory Coast and Ghana, the two largest producers, have been hit by heavy rain, dry heat, and disease, impacting their output.
According to a report from the International Cocoa Organization, poor road conditions have also made it challenging to bring the available beans to port, further exacerbating the supply constraints. Arrivals at ports in Ivory Coast and Ghana have declined by 28% and 35%, respectively, compared to the same period last year.
The rise in cocoa prices has had repercussions on companies like Hershey, which has forecasted flat earnings growth for the year due to the escalating cocoa prices. Despite the challenges posed by the volatile market, Hershey CEO Michele Buck remains optimistic, citing a good hedging strategy and price visibility on inputs into 2024.
As cocoa prices continue to climb, it remains to be seen how companies and consumers will navigate the impact of these record prices. Stay tuned for more updates on this developing story.
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