Have a sweet tooth? Here’s why your cravings may burn a hole in your pocket

Chocolate lovers might have a tough time as the cost of their favourite treat is expected to increase even more due to soaring cocoa prices. Even though it can be beneficial for needy cocoa farmers, the high cost of other essential components for chocolate , however, may not be good news for consumers. El Niño is back, and forecasts for hotter, drier weather in producing nations now pose a threat to exacerbate the current shortage. Let’s take a closer look. Cocoa prices are increasing According to CNBC, prices of cocoa on Friday surged to $3,160 (~Rs 2.59 lakh) per metric ton — the highest since 5 May 2016. The commodity was last trading at $3,171 per metric ton. Chocolate prices have risen by 14 per cent in the past year, the outlet cited data from the consumer intelligence database NielsenIQ. These prices are about to rise further due to strained supplies of cocoa, which is a significant component of the much-loved foodstuff. S&P Global Commodity Insights’ Principal Research Analyst Sergey Chetvertakov told CNBC in an email, “The cocoa market has experienced a remarkable surge in prices… This season marks the second consecutive deficit, with cocoa ending stocks expected to dwindle to unusually low levels." [caption id=“attachment_12775692” align=“alignnone” width=“640”] According to CNBC, prices of cocoa on Friday surged to $3,160 (~Rs 2.59 lakh) per metric ton — the highest since 5 May 2016. Graphic: Pranay Bhardwaj[/caption] As usual, a shortage of supply is what causes prices to rise. Demand has stayed strong, particularly in Europe and Asia, noted Paul Joules, a commodity analyst for Rabobank who focuses on cocoa and dairy markets, according to CNN. Cocoa yields are underwhelming due to crop disease and heavy rains. Experts have also predicted that in the upcoming season, because of El Niño, a naturally occurring phenomenon in the tropical Pacific Ocean, usually brings warmer global temperatures — poor conditions for growing cocoa. Also read: Why Mars chocolate bar is ditching its traditional wrapper Insufficient supply According to Joules, experts discovered a few months ago that cocoa supply wasn’t keeping up with demand. As per the International Cocoa Organization’s monthly report for April,  “Compared to the 2021/22 cocoa year, the 2022/23 cocoa season is heading towards a supply deficit due to a reduction in production."  World’s largest cocoa beans growing region in West Africa may also witness a decline by as much as eight per cent in the next season due to unfavourable weather, TIME magazine quoted Fuad Mohammed Abubakar, head of Ghana Cocoa Marketing Company as saying. The dismal outcomes could be the result of crop disease. “What we saw was, potentially, more cases of swollen shoot disease,” said Joules, according to CNN. He noted that swelling stems are one of the signs of the cocoa swelling shoot virus, which is spread by insects. Production in nations that produce cocoa has been impeded by it for years. Farmers frequently have to remove diseased trees and plant replacements in order to combat the fatal disease. According to him, it can take those new trees years to attain their peak production. He suggested that other elements, such as ageing plants that don’t produce as much cocoa, may have contributed to the lower yield. [caption id=“attachment_12775722” align=“alignnone” width=“640”] According to Joules, experts discovered a few months ago that cocoa supply wasn’t keeping up with demand. Pixabay[/caption] According to the Cocoa Organisation, Ivory Coast, the world’s largest producer of cocoa, heavy rains could potentially delay the harvest of spring and autumn harvests. Furthermore, rain and humidity increase the risk of crop disease, which could have a detrimental impact on the harvest. Also read: What is better than chocolates and beer? Weed, says America Another threat – El Niño El Niño is posing a threat to the harvest for the upcoming season, adding to the difficulties of this year. According to Gro Intelligence, a company that analyses agricultural data, the main cocoa harvest in Ivory Coast “may suffer as El Niño climate conditions are expected to gain strength.”  The area’s poor weather has a significant impact on the world market for cocoa. According to the firm, Ivory Coast produces about half of the world’s cocoa beans, with Ghana, Cameroon, and Nigeria each providing around a quarter of the total supply. This results in an “outsized impact of the region’s weather patterns on world cocoa prices and supplies,” it said. Farmers who are having a hard time may get some relief from the price hike. CNN quoted Tony’s Chocolonely, a chocolate manufacturer with headquarters in Amsterdam that seeks to lessen exploitation in the cocoa supply chain, is pleased with the price increase. Pascal Baltussen, Tony’s chief of impact and operations, expressed his happiness at the growing price of cocoa. For West African cocoa farmers to make a livelihood, cocoa prices have been far too low. In Ghana and Ivory Coast, cocoa producers are compensated using prices from futures contracts. The outlet quoted Alex Assanvo, executive secretary of the Initiative Cacao Côte d’Ivoire-Ghana, as saying that although higher futures prices are good, they won’t continue long. Based on past patterns, he predicted that the price will likely decrease fairly soon. [caption id=“attachment_12775732” align=“alignnone” width=“640”] Chocolate prices will further increase may be in the horizon due to the rising cost of cocoa. Pixabay[/caption] Sugar and cocoa butter prices increased According to data from NIQ, which records US retail sales, chocolate prices increased 14.5 per cent on average in the year through 29 April when compared to the same period the year before. According to Mintec’s Director of Commodity Insights Andrew Moriarty, “Cocoa butter, with some cocoa liquor included in dark or milk chocolate, is the most direct reflection of how chocolate prices would move.” Another key component of chocolate, sugar, is also seeing price increases. In April, it reached an 11-year high, according to CNBC. Chocolate prices will further increase may be in the horizon due to the rising cost of cocoa. Because cocoa contracts are lengthy, it’s possible that buyers haven’t yet benefited from the higher pricing. But eventually, cocoa prices are going to increase for chocolate manufacturers. Steven Voskuil, the CFO of Hershey , stated on an investor call in April that “cocoa and sugar in particular are moving in the wrong direction,” but he made no mention of pricing. Price rises in key elements are something that “we do expect to see potentially more impact in 2024 than 2023,” he said. “I don’t think the consumer has seen the full extent of the impact yet,” he stated. The entire amount of the price increase for consumers “won’t be seen until new contracts are in place,” according to the statement. Any increase would be added to already high retail chocolate costs. With inputs from agencies Read all the  Latest News ,  Trending News ,  Cricket News ,  Bollywood News , India News  and  Entertainment News  here. Follow us on  Facebook,  Twitter and  Instagram.