Chocolates may pinch you a little more as global cocoa prices soar

Your favorite chocolate – milk or dark – can hit your pockets a bit more as London cocoa prices on the InterContinental Exchange soared to a 46-year high of £2,678 ($3,406.76) a ton. Prices of other cocoa products are also likely to rise. But don’t be surprised if his weight drops.

Cocoa prices rose about 50 percent year-on-year due to concerns about lower supplies from major producers, particularly from Africa, and fears that El Nino could pose more risks to production.

“Higher global cocoa prices will push up chocolate prices, but they will only be marginal,” said Nitin Kordia, India’s first chocolate connoisseur who runs Cocoshala – an incubation training center for young chocolatiers.

manufacturers maneuver

Chocolate prices are likely to increase marginally because it contains 50 percent sugar. Devabhaktuni Durga Prasad, Managing Director, DP Cocoa Products Pvt Ltd, said:

However, he said, business for consumer chocolate companies “don’t usually increase prices as input costs go up. They cut the grammar.”

Chordia backed up his point, saying the rules might be cut or the sugar content increased. “Manufacturers may come up with new brands with reduced grammar to manage the situation,” he said.

Cocoa butter prices will rise, Prasad said, while food companies that use cocoa may find their expenses increased.

However, the impact of mitigation will come from the recent reduction in cocoa import duties to 15 percent from 30 percent, Cordia said.

The second year of disability

The recent forecasts of the International Cocoa Organization (ICCO) that the global shortage of the commodity may rise to 1.42 thousand tons during the current season (October 2022 – September 2023) led to the bullish trend.

Some in the trade peg the deficit at around two lakh tons. This is the second consecutive year of global cocoa deficit. Research agency BMI, a unit of Fitch Solutions, expected the deficit to narrow to 50,000 tonnes from 2.1 thousand tonnes in 2021-22. The deficit last season was the first since 2015-16.

BMI said this led to global inventories falling 11.3 percent year on year. This has resulted in many global manufacturers running low on inventories, creating pressure on lean supplies. It said bullish cocoa sentiment found support from stronger-than-expected demand in the March quarter of this year.

Fewer-than-expected arrivals in Ivory Coast, where rains in June “exacerbate existing concerns about bean quality” in light of lower agricultural input use and active El Niño conditions posing further downside risks to cocoa production in the second half of 2023, he said.

Positive development

The research agency said production in Ghana had not recovered from the 2021-22 crop affected by cotyledonous disease. Production could rise to 7.6 thousand tons this season from 6.9 thousand tons last season, though.

BMI raised its forecast for the average cocoa price for 2023 by $200 per ton, to $2,700.

Until May 2023, cocoa prices averaged $2,988 per ton, which equates to a 2.5 percent increase month-on-month, which is the sixth consecutive month that average cocoa prices have increased, going back to November 2022 when it reached Average prices are $2,468. ,” He Said.

Chorida said that rising global prices have also brought about a positive development as farmers are now thinking about added value.

The cacao appears as a pod from the tree. The pod, about the size of a soccer ball, is opened, the beans are removed and then fermented, dried and sold.

Major manufacturers buy these beans and go alkaline to ensure consistency in the quality of the chocolate they make. “Farmers are now starting to think if they can get high value just by producing cocoa, then there can be huge benefits if they add value. The price hike over the past year has made that happen,” he said.

GVSR Prasad, a farmer who grows cacao as an intercrop with coconut in Tadikalapudi village in West Godavari district of Andhra Pradesh, said farmers are now being charged €240 per kg as opposed to €200 at the beginning of the year.