Cocoa Prices Are at a 19-Month High, Putting Further Financial Pressure on Dessert
Between the rising prices of vanilla and cocoa, dessert is getting really expensive
Dessert is, very much by its nature, an indulgence. Yes, sometimes, on a rare occasion, you may partake in a bit of excess. Sure, maybe once, you decided to skip lunch, opting to repeatedly pull chocolates from that bucket of candy you keep on your desk. Okay, maybe you have no control over your sweet tooth whatsoever. But hey, good news, pretty soon you might not be able to afford your favorite sweets at all!
Hot on the heels of yesterday’s talk about the world’s ongoing vanilla shortage, the Financial Times reported today that global cocoa prices have hit a 19-month high, maxing out at $2,856 per ton, a price about $1,000 higher than the most recent low from December.
Cocoa lovers hoping for a quick reprieve won’t be happy with the bleak portrait painted by Bloomberg earlier this week. The financial giant quoted an analysist who suggested that a “raging long-term bull” was upon us (don’t use that phrase outside of a financial context) after Citigroup predicted the tightest cocoa supply in a decade.
The problems are reportedly multifold. A lack of rain has slowed production in West Africa, where over two-thirds of the world’s cocoa supply comes from, and the potential for an upcoming El Nino weather pattern could exacerbate the problem. Indonesia, another major cocoa producer, has also has crop issues.
But ironically enough, another cause of the current spike in futures is that, over the previous two years, cocoa prices were driven down by an overabundance of supply in the market. Looking for ways to increase earnings, farmers cut costs, which took a toll on their production and a shortage ensued.
Though, similar to that pattern, cocoa costs will almost inevitably correct themselves, Shawn Hackett, the president of Hackett Financial Advisors in Boynton Beach, Florida, told Bloomberg that prices could potentially near the 32-year high set back in 2011 before that happens. “The longer time passes by and the more El Nino weather impacts begin to run the global weather patterns, the more bullish this market will become,” he said.
However, on the bright side, according to Food Business News, though speculation is driving futures prices higher, currently, no actual cocoa bean shortage exists – so though prices may go up, your beloved chocolate will still be around. So feel free to keep digging into that bucket of Hershey’s Miniatures on your desk. You don’t have time to grab lunch anyway.