The hand of Alain Kablan Porquet in dry cocoa beans, in Gagnoa, Ivory Coast, November 19 2023.
The Washington Post | Getty Images
Cocoa prices have surged to all-time highs this week as bad weather conditions hammer crop yields in West Africa, home to three quarters of the world’s production.
Cocoa futures prices have surged more than $1,000 or nearly 40% since the start of the year to hit an intraday all-time high of $5,874 per metric ton Thursday.
The El Nino weather phenomenon is causing drier temperatures in West Africa, hurting crop yields in Ghana and Ivory Coast, the two largest producers of the bean.
“The changing weather patterns means that the potential yields of cocoa are now permanently impaired,” Humza Hussain, a commodities analyst at TD Asset Management, told CNBC Thursday.
Hershey CEO Michele Buck said Thursday that the chocolate maker’s earnings growth will be flat this year due to historically high cocoa prices. Hershey reported fourth quarter net income of $349 million, a nearly 12% decrease compared to the year-ago period.
“As we look at those record cocoa prices, certainly it’s a dynamic market and those are a challenge but we have lived through market volatility and fluctuation in input costs before,” Buck told CNBC Thursday.
“We have a good hedging strategy and we have really good price visibility on those inputs into 2024,” she said.