Cocoa puff
If you haven’t got a Valentine’s Day present already, buying a box of chocolates for a loved one might not be a bad investment, as cocoa prices have skyrocketed to record highs.
Last Thursday, cocoa futures closed just shy of $5,900 per metric ton, according to data from YahooFinance, up nearly $1,500 since the start of January, marking a 128% increase in the last 12 months.
The shift comes as hot, dry conditions and changing weather patterns arising from the El Niño phenomenon continue to devastate crop yields in West Africa. Indeed, Ivory Coast, the world’s top cocoa producer, even halted next-season sales of the commodity at the end of January, as a ~150,000 ton bean shortage and rising freight costs in the Red Sea have left the country close to default on several of its export contracts.
Bean count
Around two-thirds of global cocoa production comes from Ivory Coast and Ghana alone, and a large portion of these cocoa beans go to processing facilities in Europe to make chocolate. As such, the stalling of West African crops has had a huge knock-on effect on the rates of confectionery internationally.
American candy behemoths are also expected to feel the ache. At the end of last week, Hershey issued a warning about its profits for the year ahead due to greater cocoa expenses giving rise to higher prices, off the back of an already not-so-sweet outlook: Hershey also outlined a 2-year restructuring plan to mitigate the company’s 6.6% drop in sales in its most recent quarter.
