Cocoa prices hit a record Tuesday as supply constraints fuel prices higher.
Futures for May delivery were up 3.9% at $10,030 per metric ton, marking the first time the commodity breaks above the $10,000 mark. Cocoa has been on a tear this year, soaring nearly 138%.
Difficult weather conditions and disease have affected production in West Africa, which produces about 70% of the world’s cocoa. The two largest producers, Ivory Coast and Ghana, have been hit by a combination of heavy rain, dry heat and disease recently.
Late last year, heavy rain and the spread of black pod disease in the two countries affected farming, according to a November report from the International Cocoa Organization. Poor road conditions also made it difficult to bring the available beans to port, according to the report.
“As these two leading producing countries supply about two-thirds of global cocoa beans, any change in their production tends to have a significant impact on the cocoa market,” the ICCO said.
Arrivals at ports in Ivory Coast and Ghana have declined 28% and 35%, respectively, since the start of the season compared to the same period last year, according to a February ICCO report.
Hershey has forecast flat earnings growth for the year due to rising cocoa prices. The company reported fourth-quarter net income of $349 million, a decrease of about 12% compared to the same period in the prior year.
“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,” Hershey CEO Michele Buck told CNBC in February.
“We have a good hedging strategy and we have really good price visibility on those inputs into 2024,” she said.
Correction: Cocoa prices are up more than 100% this year. A previous version misstated the move.