Chocolate as a luxury good
Chocolate is slowly becoming a luxury good. This is because the price of cocoa, which is used to produce chocolate, is rising and rising and rising. In New York, more than 10,000 dollars were paid for a ton of cocoa at times during the week before Easter, more than ever before. But things are volatile. On the last Thursday before Easter, the price was at 9,300 dollars per ton. At the beginning of the year, it was still 4,200 dollars, so measured against the record high, there has been an increase of almost 140% in one quarter.
Speculation on a supply deficit
The price on the London futures market also rose sharply to around 7,716 pounds, up from 3,400 pounds at the beginning of January. The trigger for the rise to dizzying heights was speculation that there could be a global supply deficit in 2023. This brought the first speculative buyers onto the scene. The price increase then accelerated this year. There was a shortage of supply as a result of very unfavorable weather conditions in Ghana and the Ivory Coast. The West African countries are the largest producers of the agricultural commodity, with their combined production accounting for around 60% of global cocoa production. Both countries experienced heavy rainfall in December, which significantly affected the harvest as large quantities of plants rotted.
First wet, then drought
Cocoa producers are facing further adversity caused by the El Niño climate phenomenon. It is common for El Niño to be followed by drought after extreme humidity. As cocoa is sensitive to drought, crop yields have once again been decimated. The price on the futures exchanges on both sides of the Atlantic continued to soar, interrupted only by brief periods of profit-taking. At present, it does not look like the cocoa price will return to the levels of 2023. This is because traders and other buyers of the commodity are trying to replenish supplies. This is keeping demand high. It is therefore quite possible that in around nine months' time, chocolate Santas will be available on supermarket shelves at significantly higher prices than chocolate bunnies at present.
