Cocoa prices surged to unprecedented heights on Tuesday, driven by constraints in the supply chain that are propelling prices upward.
Futures contracts for May delivery experienced a remarkable 3.9% increase, reaching $10,030 per metric ton.
This milestone marks the first instance where the commodity has surpassed the $10,000 mark. Cocoa’s ascent has been staggering this year, with prices skyrocketing by nearly 138%.
This region contributes approximately 70% of the world’s cocoa output. Both Ivory Coast and Ghana, the two largest cocoa producers, have faced adverse conditions such as heavy rainfall, dry heat, and disease outbreaks.
A report from the International Cocoa Organization in November highlighted the impact of heavy rains and the spread of black pod disease on farming activities in these countries.
The ICCO noted, “As these two leading producing countries supply about two-thirds of global cocoa beans, any change in their production tends to have a significant impact on the cocoa market.”
Data from a February ICCO report revealed a substantial decline in cocoa arrivals at ports in Ivory Coast (28%) and Ghana (35%) compared to the same period in the previous year.
Hershey, a major player in the cocoa market, has forecasted flat earnings growth for the year owing to the surge in cocoa prices.
Addressing the challenges posed by record cocoa prices, Hershey CEO Michele Buck stated in an interview with CNBC in February,
“As we look at those record cocoa prices, certainly it’s a dynamic market, and those are a challenge, but we have lived through market volatility and fluctuation in input costs before. We have a good hedging strategy, and we have really good price visibility on those inputs into 2024.”
