Amid a supply constraint and long rally that pushed prices higher since the start of the year, cocoa hit a record Tuesday and surged beyond $10,000 per ton, which is likely to raise the cost of chocolate as well.
Futures jumped as much as 4.5% to $10,080 in New York on Tuesday, according to a Bloomberg report, a level that seemed unthinkable only a few months ago. The rally has pushed a technical gauge of prices into overbought territory for much of the last couple of months, though cocoa has continued to soar.
A day earlier, media reports indicated that cocoa prices rallied as much to surpass the index of copper, as it extended its surge gaining more than $700 per ton in a single day and surpassing $9,000 for the first time ever.
The shortage in cocoa, mainly supplied by West African nations, put the world on course for a third straight annual supply deficit.
That’s bad news for consumers if chocolatiers keep passing on higher costs or sell bars that are smaller or that have less chocolate in them. The looming Easter holiday is a peak period for chocolate consumption, and the lag between commodity and retail markets means the brunt of the impact for shoppers still lies ahead.
However, the skyrocketing surge in cocoa prices may come as an advantage to some top producers ahead of the holiday, which could turn the commodity's prices into a business advantage.
The surge in cocoa costs, which comes on top of high sugar prices, "increases the challenges for Swiss chocolate," Thomas Juch, spokesperson for Chocosuisse, the sector's employers' federation, told Agence France Presse (AFP).
The cocoa price hike is happening against a "context of increased price sensitivity" on the part of consumers, and is currently partly being borne by the manufacturers who "cannot fully pass on this increase in retail prices," he said.
This is because prices are adjusted at intervals during negotiations with the supermarket chains and are not changing continuously, said Juch.
Food price inflation in 2023 is shown to have dampened consumer appetite, with Swiss chocolate export volumes slipping 0.2% to 150,516 tons, according to Chocosuisse.
And per capita, annual consumption in Switzerland – the world's largest consumer of chocolate – fell by 1%, to 10.9 kilograms.
Cocoa prices increased almost 70% in New York and almost 90% in London in 2023 following poor harvests in the leading producers, Ivory Coast and Ghana, due to heavy rains, a cocoa pod disease outbreak, and then drought.
However, cocoa prices have doubled again since January.
