World cocoa prices hit new records for a ninth straight day on Friday, leaving market participants panicked that supply shortages are becoming systemic and will extend to a fourth straight season, if not beyond.
The price surge is also expected to bite further into the pockets of chocolate consumers as chocolate makers have mostly run down their stock of cheap beans, industry experts said.
Chocolate major Hershey said on Thursday it expects historic cocoa prices will limit its earnings growth this year amid a further slowdown in demand for its pricier products.
Panic is already very much in the market, but potentially we could move even higher, said Rabobank analyst Paul Joules.
For me the real risk is next season. When we have crop tours in the second quarter, if the pod count is poor, people are going to question whether this is systemic, he added.
Joules explained that diseases currently impacting cocoa trees in top producing region West Africa are a lot worse than they have been in recent years, and that there isn’t treatment other than cutting trees out and replanting.
Benchmark ICE London cocoa futures hit a record 4,916 pounds a metric ton on Friday and were trading 2.2% higher at 4,762 pounds by 1401 GMT. Prices have more than doubled since the start of last year.
In New York, benchmark ICE cocoa futures hit a new high of $6,030 a ton on Friday and were last up 0.5% at $5,827, having nearly doubled since the start of last year.
A Reuters cocoa poll last week forecast a global deficit of 375,000 tons in the 2023/24 season, more than double that indicated in the previous poll in August, and marking a third successive deficit for the market.
Dealers said despite record high prices, sellers of physical cocoa have largely withdrawn from the market, leaving it with a continued liquidity problem.
In other soft commodities, raw sugar rose 0.9% to 24.20 cents per lb, while white sugar rose 0.5% to $668.70 a ton.
Arabica coffee rose 1.1% to $1.8785 per lb and robusta rose 1.7% to $3,162 a ton.
