Valentine's Day chocolate prices are set to break hearts after cocoa prices reached a record high

Consumers planning to buy chocolate for their loved ones this Valentine's Day may find themselves in for a shock, and not just because of inflation.

The price of cocoa – which has been on the rise due to crop failures in West Africa – rose to an all-time high last week, and ongoing shortages are putting pressure on chocolate manufacturers, who in turn are passing on higher prices to everyone else. Client.

Global cocoa prices hit a new record high for the ninth straight day on Friday, sparking panic over the possibility of prolonged supply shortages following a double blow to cocoa prices. Severe weather The cocoa plants affected by the disease are in the highest production region of West Africa.

Packaged chocolates for Valentine's Day on February 2, 2024 in Chicago. Cocoa prices have risen, recently reaching record levels, leading to an increase in the cost of chocolate. (Photo illustration by Scott Olson/Getty Images)

London ICE cocoa futures hit a record high of 4,916 pounds per metric ton on Friday before closing up 2.1% at 4,757 pounds per ton. Prices have doubled since the beginning of last year.

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In New York, benchmark ICE cocoa futures reached a new high of $6,030 a ton on Friday, closing up 1.4% to $5,888 a ton, after nearly doubling since the start of last year.

The supply shortage is driving up cocoa prices, which hit a record high last week. (Economics of trade)

A Reuters cocoa poll conducted earlier this month predicted a global deficit of 375,000 tons in the 2023-2024 season, more than double what was indicated in the previous poll in August, and represents the third consecutive deficit for the market.

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The rise in prices is trickling down to retail shelves, where Hershey expects to see a further slowdown in demand for its products from cash-conscious customers after its sales volumes fell 6.6% in the fourth quarter.

Hershey said last week that it expects higher cocoa prices to limit its profits next year. (Luc Charette/Bloomberg via/Getty Images)

The chocolate giant, whose shares are down about 30% from their peak in May 2023, also said last week that it expects higher cocoa prices to limit its earnings growth this year.

Trading volumes at its rival, Mondelez, maker of Cadbury, also fell in the last quarter.

“Going back 47 years, almost every major price drop was followed by a massive 20-50% price drop, within a year or two. Is this situation any different? According to my sources in the cocoa bush of West Africa… Yes! said Jim Romer, meteorologist and commodities trading advisor at Best Weather Inc.

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He added: “At least for now, the pressure may continue for another month or two.”

Reuters contributed to this report.