Cocoa futures rise on dry weather in West Africa

November to March is the dry season in Ivory Coast, by far the world’s largest exporter of cocoa beans. But it has been particularly dry in recent weeks, according to analysts and traders, with investors betting on a lower harvest and continued price growth.

The most actively traded cocoa futures are up nearly 12% this year and 11% in February alone to $2,811 per metric ton, on pace at the highest monthly level since April 2018. This has added to the challenges faced by chocolate manufacturers and sellers, who have complained of rising labor and other costs.

Analysts warn that a continued lack of rain could damage a crop set for harvesting in April, requiring more beans to make the same product. Analysts at Commerzbank said in a note on Tuesday that some local buyers are reluctant to pay previously agreed prices for cocoa beans, citing low quality.

Peter Moose, a trader at RJO Futures, said, “You see cocoa futures going up and your chocolate bar going to get more expensive.

Cocoa beans, which ended 2021 down 3.2% as supply levels held steady, are one of several commodities to see prices rise recently. Sugar, another key ingredient in chocolate, is approaching a four-year high, while soybean is heading towards a high recorded last year. Arabica Coffee is up 11% in 2022.

Analysts say light, incessant rains may improve the cocoa crop in April, but a sudden increase in rainfall could be followed by a drought. A disappointing April harvest, meanwhile, may indicate a weak main crop, which grows from October to March.

“If we see warmer temperatures without rain, then this trend [prices] The move higher is really going to continue,” Mr Moose said.

The demand for chocolate makers is increasing. The Hershey Company, famous for Reese’s Chocolates and Hershey’s Kisses among other products, said it’s running low on Valentine’s Day candy this year. The Pennsylvania-based company said it added production lines and hired more workers, but it wasn’t able to keep up.

According to Nick Trifelos, sales and marketing manager at Anthony-Thomas Candy Company, a chocolate maker based in Columbus, Ohio, the cocoa supply contract will expire soon. Mr. Trifelos expects the next one to come at a higher cost.

“We have been told that this will be a change from our habit,” said Mr. Trifelos. “We know it will be a noticeable difference.”