Consumers planning to buy chocolates for their loved ones this Valentine’s Day may be hit with sticker shock, and not just because of inflation.
The price of cocoa – which has risen due to crop damage in West Africa – hit a record high last week, and ongoing shortages are putting pressure on chocolate makers, who in turn are passing on the increase in prices for customers.
Global cocoa prices hit a new record for the ninth consecutive day on Friday, sparking panic over the risk of supply shortages after a double whammy of extreme weather and cocoa plant disease hit in the region’s worst-hit region. producer in West Africa.
Benchmark ICE London cocoa futures hit a record 4,916 pounds per tonne on Friday before closing 2.1% higher at 4,757 pounds/tonne. Prices have more than doubled since the start of last year.
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In New York, benchmark ICE cocoa futures hit a new high of $6,030 per tonne on Friday, closing up 1.4% at $5,888 per tonne, after nearly doubling since the start of trading. ‘last year.
A Reuters cocoa poll due earlier this month predicted a global deficit of 375,000 tonnes for the 2023/24 season, more than double that indicated in the previous August poll, and marking a third consecutive deficit for the market.
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The price surge is trickling down to retail shelves, with Hershey expecting a further slowdown in demand for its products from money-conscious customers after its sales volumes fell 6.6% in fourth trimester.
|THE HERSHEY Co.
The chocolate giant, whose shares are down about 30% from their May 2023 peak, also said last week that it expects rising cocoa prices to limit growth in its profits this year.
Volumes at its rival, Cadbury maker Mondelez, also fell last quarter.
|MONDÉLEZ INTERNATIONAL INC.
Mondelez International, Inc.
“47 years ago, almost every major price drop was followed by a massive breakout of 20-50%, within one to two years. Is this situation different? According to my sources in the cocoa trees of West Africa… YES! ” said Jim Roemer, meteorologist and commodities trading advisor at Best Weather Inc.
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“At least for now, the crisis situation could well last for another month or two,” he added.
Reuters contributed to this report.
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