Cocoa prices hit 45-year high ahead of Christmas
Global cocoa prices have hit a 45-year high, threatening a crisis for consumers and retailers ahead of the key Christmas trading season.
At today’s late morning snapshot, the bean was trading at $4,362 per tonne, up 84 per cent on this point last year.
The levels surpass even the 2011 peak driven by that year’s Ivory Coast export ban on the commodity.
Delayed harvests in the two most important cocoa-producing countries, Ghana and Ivory Coast are worsening already-stringent supplies dating back to the pandemic.
However, supply shortage fears have been widespread throughout the industry for years.
In 2018, the International Cocoa Organisation (ICCO) projected that the global cocoa supply would fall short of demand by approximately 1m tons annually by 2050 — a 10 per cent global output decrease.
This has already been felt by shoppers through responsive action taken by some confectionery giants.
In March last year, Mondelez announced it would be reducing the size of the chocolate bars under its Cadbury brand, though prices remained unchanged — a course of action it announced it wished to pursue.
Mondelez has paid out $2.2bn in shareholder dividends to date this calendar year and recorded $9bn net revenue in Q3 2023.
Mars followed suit in September this year, shedding the weight of its Galaxy Smooth Milk bars from 110g to 100g.
“What we’re hearing from some producers in cocoa-producing regions is that companies are putting off purchasing cocoa at these prices,” said Susannah Streeter, head of money and markets for Hargreaves Lansdown.
“This drops demand, meaning the local market falls in price and thereby setting a lower future price.”
Other industry leaders have publicly commented on the cocoa shortage. During an analyst call in April, Hershey Co. chief financial officer Steve Voskuil said that “cocoa and sugar in particular were moving in the wrong direction”.
Mondelez and Mars were contacted for comment on future size reductions.