Cocoa prices are surging so stock up on cheap chocolate now

Cocoa prices are on the rise due to a drop in supply from Ivory Coast, which may result in more expensive chocolate in stores.

The chocolate market has been dealing with a global surplus that dropped prices 32 percent over the last year. This, in turn, trickled down to the lower retail costs of chocolate reflected in stores. As a result, money managers have been aggressively betting on cocoa, but that’s all over now.

For the past three weeks, Bloomberg reports hedge funds have moved away from chocolate, signaling prices may be rebounding after a ten-year low in April.

By way of explanation, the magazine reported:

Ivory Coast growers have sold 950,000 tons of cocoa beans from the 2017-18 main crop as of May 27, according to a person familiar with the matter. The main crop, which starts Oct. 1, is the larger of the country’s two annual harvests.

“That’s a pretty big upfront sale, and it’s probably the reason why prices are rallying,” Jack Scoville, vice president for Price Futures Group in Chicago, said in a telephone interview.

Bloomberg also hypothesized that the lower yields may be due to a dry season in growing regions in Ivory Coast and Ghana. Indonesia has also been hit by a lack of moisture as well.

While this feels distant — and the connection from big upfront sales to expensive chocolate may feel counterintuitive when you’re outside the industry — it can have a very real impact on the market. This is ultimately good for the industry and good for the farmers, though of course, it may contribute to a rise in consumer price. Experts feel all right about that though, as consumers are also indicating an interest in higher-quality (and consequently more expensive) chocolate anyways.

Which is to say, stock up on your cheap chocolate while you still can.

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