Cocoa prices reach new 52-week highs as demand rises 9%

It’s been a crazy story. We’ve been tracking for last what, year and a half. Cocoa prices continuing to make new all time highs with companies like Hershey and Nestle seeing more margin pressure ahead of earnings. Our Frank Holland is in London, he’s been tracking the story. Hi Frank. Hey there, Sarah, what’s going on? So you know, we’re talking about Coco, of course, the key ingredient in chocolate. It’s really having a somewhat mysterious rally, but it’s a big one, up over 300% over the last year, up over doubling just in the year to date so far. So that’s also raising the cause for major chocolate companies, makers who raise consumer prices. Of course, a lot of talk about that during Easter. But still, we’ve seen demand in the United States still rise. It’s up 9% quarter over quarter from Q1 and Q4. It’s up about 5% in Asia and Europe. So the primary reason for this price spike is a crop shortfall in West Africa, where 3/4 of the global supply is grown over two seasons. The spring harvest that’s underway right now is forecast to be at least 10% lower, according to the International Cocoa Organization that holds its annual meeting in Brussels this week. I spoke with the executive director he cited. Aging farmers, plant disease, El Nino and climate change, however. There really isn’t a clear cause for this shortfall, and that’s raising a lot of concerns about the fall harvest that’s twice as large and even more profitable. And traders say that mystery is what’s leading to the price surge. The major issue today is I can’t tell you exactly that I cannot put my finger on the exact reason why the crops have failed in the way that they have this season. And as I can’t be categoric about the reasons that they failed, that means I can’t be categoric about whether it’s going to happen again or not. So Hershey’s was downgraded ahead of upcoming earnings on concerns about rising cocoa prices. You see other chocolate makers, they’ve traded lower year to date. City actually out with a note saying this is the tightest cocoa market in just about 50 years. Traders. They’re also identifying a new soft commodity that’s having a bull market right now. That one’s coffee. Coffee’s up 25% over the last month. However, considerably less mystery here. This is due to unseasonably warm weather and a drier than normal season in Vietnam. But still coffee prices on the rise. That could be the next off commodity. Amazing run up in the next couple weeks.