The World Is Running Out Of Chocolate

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The FT reports that hedge funds have pushed into cocoa futures as supply dips and prices surge. They are probably right should they be betting, the price will increase. Their investment has reached $8.7 billion. Due to climate change, the supply of cocoa has been decimated. The paper reported, “While poor weather and disease afflicting the cocoa trees in the world’s main cocoa growing regions in West Africa sparked the rally, the hedge fund stampede has added to its fierceness, according to analysts, traders and brokers.”

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The cost per metric ton of cocoa has reached $5,880. It closed last year at $4,250. In October of 2022, it was $2,250.

Heavy rain has hit cocoa crops hard, particularly in West Africa, which produces a massive amount of the world’s supply. Alternatively, the weather has turned unseasonably warm more recently. The Ivory Coast and Ghana grow about 50% of the world’s crop. This weather, in turn, has been blamed on El Niño. One of the largest producers, Cargill, has shut down operations in Ghana.

Chocolate Up 70%

Chocolate prices have risen as much as 70% in the last year. The shortage means intermittent shutdowns of some manufacturers. If manufacturers remain shuttered, some chocolate and chocolate bars may not be made for several months. As far as consumers of these products are concerned, chocolate, for a time, will be gone.

The news is another reminder of the effect climate has on crops. The cocoa shortage is trivial for most chocolate consumers but a severe blow to Ivory Coast and Ghana farmers. On a much broader basis, CO2 reduces the nutritional value of many foods. To make matters worse, climate change can mean no crops in parts of the world. The World Bank recently reported, “An estimated 55 million people globally are affected by droughts every year, and they are the most serious hazard to livestock and crops in nearly every part of the world.”