Cocoa hit record prices due to El Niño climate phenomenon in West Africa

Cocoa futures continued to rise to a record high and extend sharp gains this week, as fears related to supply shortages took hold of the market, threatening to make chocolate and other sweets more expensive.

According to CNBC, cocoa prices rose to their highest levels ever this week, as bad weather harmed the crop in West Africa, home to three-quarters of global production.

Cocoa futures prices have risen more than $1,000, or nearly 40%, since the beginning of the year to reach an all-time intraday high of $5,874 per metric ton, surpassing the 1977 peak of $5,379 per ton.

This represents an increase of nearly $600 per ton since last Friday’s close, and puts the contract at its highest level in 65 years.

“Changing weather patterns mean that cocoa’s potential returns are now permanently weak,” said TD Asset Management commodity analyst Hamza Hussain.

The El Niño climate phenomenon causes temperatures to rise in West Africa, harming crop yields in Ghana and Ivory Coast, the largest bean producers.

Prices have doubled over the past year, as farmers in West Africa, who make up the bulk of global supplies, have been severely damaged by extreme weather conditions. Consequently, the prices of candy and chocolate have risen, and the rise in cocoa prices is expected to affect the results of chocolate makers such as Hershy’s. Which said Thursday that rising prices will limit profit growth this year.

Analysts warn of the possibility of prices rising to $6,000 per ton, as global cocoa supplies tend to fall below the level of demand for the third season.