China News Network, August 8 (Zhongxin Financial Reporter Xie Yiguan) In daily life, chocolate is a favorite snack for many people. But as raw materials such as cocoa rise in price, the chocolate you eat may rise in price.

Soaring! Cocoa futures have repeatedly reached new highs

Recently, soaring cocoa futures have attracted market attention. Cocoa prices for chocolate ingredients rose to a more than 7-year high in the New York market on July 18, after just a few weeks ago, cocoa prices in the London market rose to a 12-year high, Reuters previously reported.

Zhongxin financial reporters inquired on the Intercontinental Exchange and found that London cocoa futures rose this wave, since the end of last year, August 8 once rose to a new high of 1,2703 pounds per ton, and has continued to hover at a high level in recent days.

London Cocoa Futures (1 year) chart

Why are cocoa futures "rising"? In the June Cocoa Market Report released by the International Cocoa Organization (ICCO), the floods could have a potentially harmful impact on cocoa growth in Côte d'Ivoire, causing serious tensions, and thus contributing to the rise in cocoa futures prices, as described in the June cocoa market report released by the International Cocoa Organization (ICCO).

Côte d'Ivoire is the world's largest cocoa producer, accounting for 45 per cent of world cocoa production and 40 per cent of its total exports, according to the Abidjan Portal in Côte d'Ivoire. However, affected by the continuous heavy rainfall, Yves Brahima Kone, president of the Cocoa Coffee Committee of Côte d'Ivoire, announced that Côte d'Ivoire has decided to stop cocoa exports in 2023-2024.

Not only Côte d'Ivoire, but also cocoa production in neighboring countries such as Ghana is also affected by rainfall. Under the influence of weather and other factors, Bloomberg reported that cocoa production in Côte d'Ivoire is expected to fall by 20% year-on-year this year, and cocoa production in Ghana, the second-largest cocoa producer, is expected to be lower than the historical average.

Sugar futures prices are also at high levels

Not only cocoa, but also sugar, another major ingredient needed to make chocolate, has also continued to see futures prices high this year.

Due to increased demand and adverse weather expectations, ICE raw sugar futures climbed to an 4-year high in April, according to Reuters.

Although sugar prices have fallen recently, sugar 8 main futures still closed at 11.11 cents per pound as of Aug. 24.

Sugar 11 main even futures price chart.

In response, the Food and Agriculture Organization of the United Nations said that the combination of persistent concerns about the potential impact of El Niño on sugarcane crops and the rise in international crude oil prices has curbed the decline in world sugar prices.

However, the price of some dairy products used in milk chocolate has declined. The FAO Dairy Price Index fell 7.0 percent month-on-month in July and 4.20 percent compared with a year earlier, the data showed.

Lindt and Hershey signal price increases

According to NielsenIQ, a consumer intelligence database, chocolate prices rose by 2022% in 14. In the face of soaring cocoa and sugar futures prices, the market also believes that chocolate prices may rise further.

Sergey Chetvertakov, principal research analyst at S&P Global Commodity Insights, told CNBC, "I think consumers should be prepared for the possibility of higher chocolate prices." As chocolate producers continue to be squeezed by rising raw material costs, soaring energy costs and rising interest rates, they have had to pass on higher production costs to consumers. ”

According to Bloomberg, Lindt and Hershey executives warned in recent days that further increases in product prices cannot be ruled out, even if consumers already have to pay higher for their products.

Martin Hug, Lindt's chief financial officer, told analysts on an earnings call: "For most companies, the impact of a significant future price increase in cocoa will not be felt until the second half of 2023." Companies that feel additional cost pressure "are likely to feel the need to adjust pricing as a result." (End)