Inflation has caused higher prices on everything. Now depending on the weather, it could cause a price increase on everything for your sweet tooth. Consumers have already seen increased prices across the board, and while some inflated prices are expected to ease, one crucial industry price could go higher still.
Ivory Coast, Ghana, Cameroon and Nigeria account for nearly 75% of the world's cocoa bean harvest. Right now, El Niño is threatening western African crops, which could create higher prices come 2024.
While the arrival of El Niño is still uncertain, right now the precipitation is higher than normal which is good news for the mid-crop harvest of cocoa beans. However, that could change which would affect crop harvests later this year, according to Gro Intelligence.
We don’t want to say what kind of affect a global shortage of chocolate could have on the world, however. Imagine not being able to get that sweet creamy treat whenever you wanted, and what kind of havoc that could have on daily life for some chocolate lovers out there.
Not All Chocolate is Created Equally
Right now, prices for chocolate are already up 21% from last year, according to CNN. Threats of higher prices for cocoa beans means higher prices for chocolate in all its forms.
“As chocolate is made up primarily of cocoa butter, with some cocoa liquor included in dark or milk, the price of butter is the most direct reflection of how chocolate prices would move,” said Andrew Moriarty, Mintec’s Director of Commodity Insights. Milk chocolate and white chocolate are made with less cocoa butter than that of dark chocolate, so dark chocolate lovers might feel the price increase even more, according to Food Beast.
Prices are already higher than earlier this year.
“The cocoa market has experienced a remarkable surge in prices... this season marks the second consecutive deficit, with cocoa ending stocks expected to dwindle to unusually low levels,” said S&P Global Commodity Insights' Principal Research Analyst Sergey Chetvertakov to CNBC. “I believe that consumers should brace themselves for the likelihood of higher chocolate prices,” Chetvertakov said.
Additionally, there is no sign of lower demand for chocolate.
“Continued strong demand tied to whatever economic indicators one chooses to look at could keep prices high for the foreseeable future,” said Darin Newsom, Barchart’s Senior Market Analyst. “Only if demand starts to back down, something I don’t think has occurred yet, will prices of chocolate start to back off,” Newsom said.
Chocolate at an All Time High and Low
Strangely enough, Europe imports more cocoa annually than the US. Moriarty said that consumption of cocoa is at record highs. The largest chocolate producers globally that are sure to feel the pinch of increased prices in chocolate are: the Mars Wrigley Company, which makes M&M and Snickers bars; the Ferrero Group, who makes the hazelnut cream filled Ferrero Rocher; Mondelez International (MDLZ) whose brands are Cadbury, Oreo and Toblerone; the Hershey Company (HSY), whose brands are KitKat and Reese's and Nestle (NSRGY).
It's not just the threat of El Niño that is effecting the cocoa harvest, but also that the Western African countries who supply the majority of the world's cocoa have been combating crop disease.
“Compared to the 2021/22 cocoa year, the 2022/23 cocoa season is heading towards a supply deficit due to a reduction in production,” reported the International Cocoa Organization.
“What we saw was, potentially, more cases of swollen shoot disease,” said commodity analyst for Rabobank Paul Joules to CNN. "Cocoa swollen shoot virus is spread by insects and is characterized by swollen stems, among other symptoms. It has hampered production in cocoa-supplying countries for years. To fight the deadly disease, farmers often have to root sick trees out and plant replacements. It can take years for those new trees to reach peak production," said Joules.
With the threatened crop season and having to replace sick trees, chocolate prices could be high for quite some time. This isn't exactly terrible news for the cocoa farmers, as the increased prices might improve their livelihood.
