Cocoa prices have reached a new high on the New York commodities market, outpacing previous records. This is due to dry weather in West Africa hurting cocoa crops, leading to a decrease in supply. The cost of cocoa has approximately doubled since the start of last year, impacting consumers and major chocolate manufacturers like Hershey.
Hershey warned that “historic cocoa prices are expected to limit earnings growth this year.” The company’s chief executive, Michele Buck, did not rule out putting up prices for customers. Meanwhile, Mondelez, the company behind the Cadbury brand, identified rising ingredient costs as one of the challenges it faced in the year ahead, specifically cocoa and sugar costs.
Despite an overall inflation for UK supermarket food and drink easing in November, chocolate prices grew at a notably higher rate of 15.3%. The rise in cocoa prices has been attributed to poor harvests in West Africa and the impacts of climate change on production. Hotter temperatures and shifts in rainfall patterns in the region have been identified as contributing factors to the reduction in cocoa supply. This has led traders to worry about short production years and has been further exacerbated by El Niño threatening West Africa crops with hot and dry weather according to Price Futures Group analyst Jack Scoville.