Cocoa prices reach unprecedented levels due to adverse weather conditions affecting crop yields in West Africa.
Since the beginning of the year, cocoa futures prices have skyrocketed by over $1,000 or nearly 40%, reaching an unprecedented peak of $5,874 per metric ton. The El Niño weather phenomenon has resulted in drier conditions in West Africa, which produces three-quarters of the world’s cocoa. Humza Hussain, a commodities analyst at TD Asset Management, remarked, “The shifting weather patterns indicate a permanent reduction in cocoa yields.”
This week, cocoa prices have reached record highs due to adverse weather conditions impacting crop yields in West Africa, which accounts for three-quarters of global production. Since the beginning of the year, cocoa futures prices have surged by over $1,000 or nearly 40%, hitting an intraday all-time high of $5,874 per metric ton on Thursday.
The El Niño weather phenomenon has resulted in drier temperatures in West Africa, adversely affecting crop yields in Ghana and Ivory Coast, the two largest cocoa producers. Humza Hussain, a commodities analyst at TD Asset Management, stated on Thursday to CNBC, “The shifting weather patterns indicate a permanent reduction in cocoa yields.”
On Thursday, Hershey CEO Michele Buck stated that the chocolate company’s earnings growth will remain stagnant this year due to historically high cocoa prices. Hershey disclosed a fourth-quarter net income of $349 million, marking a nearly 12% decline compared to the same period last year. “As we assess these record cocoa prices, they undoubtedly pose a challenge in a dynamic market. However, we have previously navigated through market volatility and fluctuations in input costs,” Buck informed CNBC on Thursday.
“We have implemented a robust hedging strategy and possess excellent price visibility on those inputs up to 2024,” she affirmed.
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