Cocoa beans supply shortfall

Food Sep 23, 2013 No Comments

CococaCocoa prices are up 21% so far in the third quarter, outperforming broad commodity indexes. The cost of one kilogram of chocolate in the U.S. is expected to hit a record $12.25 this year, a 45% increase from 2007, according to Euromonitor International.

Prices are on the rise due to a shortage of cocoa beans, which are roasted and ground to make chocolate. Market experts estimate that supplies will fall short of demand this year for the first time since 2010 and dry weather is expected to hurt the next harvest in West Africa, where 70% of cocoa beans are produced.

Some investors believe the rally in cocoa futures is overblown. The outlook for West African supplies is too pessimistic, and cocoa prices are likely to fall back once the harvest there begins around mid-October and traders get more precise indications of actual output, said Shawn Hackett, president of brokerage and consulting firm Hackett Financial Advisors.

The cocoa futures market is experiencing a “feeding frenzy,” Mr. Hackett said. “This has all the elements of [speculators] getting carried away.”

Still, the focus remains on rising demand, especially ahead of the confectioners’ quartet of Halloween, Christmas, Valentine’s Day and Easter in the U.S. cocoa prices soared to a one-year high last week, though on Friday they slipped 0.8% to $2,608 a metric ton as investors booked profits.

via Chocolate Prices Soar in Dark Turn – WSJ.com

Rod Sherkin

Rod is a former senior executive, responsible for Purchasing, for both Pillsbury and Ball Packaging back in the 80’s and 90’s. Since then, he has continued to work in the Purchasing field as both a consultant and founder of the website Propurchaser.com.

Leave a Reply

Your email address will not be published. Required fields are marked *