Cocoa prices continue to spike: What's driving costs higher?
FILE - Cocoa powder in ceramic bowl with cocoa beans over brown texture background. (Photo by: Natasha Breen/REDA&CO/ Universal Images Group via Getty Images)
Cocoa prices have been surging an eye-popping amount.
The key ingredient in chocolate's price sat around $9,200 per metric ton as of Monday afternoon, according to data from Trading Economics.
While down Monday, that still marked an increase of more than 26% from a month ago. Compared with a year ago, prices have surged over 190%, the data showed.
COCOA PRICES SURGE TO RECORD HIGHS DURING THE EASTER SHOPPING SEASON
Factors like weather, disease and market speculation have contributed to the spike, with West Africa in particular seeing negative impacts from drought.
Cocoa farmers struggling to further invest in their land has also led to lower production of the crop, a JPMorgan report from April said.
The price of cocoa has been an ongoing issue that candy makers have been monitoring and taking steps to address.
"While the 2023/2024 crop in West Africa declined, we are encouraged by the growth in other regions around the world and steps being taken in West Africa to improve supply," Hershey CEO Michele Buck said in May during the company’s earnings call. "Farmer prices have increased, which should enable them to make more investments in fertilizer, pesticides, and other techniques to improve yields."
The company has "robust processes in place to ensure continuity of supply" and is "well covered for 2024 and do not expect recent volatility to affect our financial outlook for the year," according to Buck.
Candy-making competitor Mars Inc., whose brands include Snickers and M&Ms, did not respond to a request for comment on cocoa prices.
In its April report, JPMorgan noted some candy makers have looked to consumer price hikes in response to high cocoa prices.
Late last month, the International Cocoa Organization projected global gross cocoa production would total 4.461 billion tons for the 2023-2024 season.
The deficit between world production and grindings will widen to 439,000 tons for the season, the group also predicted.