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Global cocoa prices have hit a fresh record high as dry weather hurts crops in West Africa. Cocoa prices on the New York commodities market reached a new all-time high of $5,874 (Sh933,848.52) a tonne on Thursday.

The cost of the key ingredient for making chocolate has now roughly doubled since the start of last year. Soaring cocoa prices are already filtering through to consumers and squeezing major chocolate makers.

On Thursday, one of the world’s biggest chocolate manufacturers Hershey warned: “Historic cocoa prices are expected to limit earnings growth this year.”

The company’s chief executive Michele Buck also did not rule out putting up prices for customers.

Future pricing

“We can’t talk about future pricing,” she said in a call with analysts but added, “given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business.”

With Valentine’s Day buying surge approaching, signs are consumers could be staring at higher prices for their sweet treats soon. Many consumers are already dealing with higher prices for several everyday items, due to inflation still being somewhat high.

Buck’s comments came as Hershey announced its financial results for the three months to December 31. The figures showed sales fell by 6.6 per cent as inflation-hit consumers cut back spending on confectionery.  Last month, Mondelez, the company behind the Cadbury brand, identified rising costs of ingredients as one of the challenges it faced in the year ahead.

Chief financial officer Luca Zaramella said the firm had seen “significant increases in both cocoa and sugar”.

In December, UK consumer group Which? said the price of some festive chocolate boxes had risen by at least 50 per cent in a year. While overall inflation for UK supermarket food and drink eased in November to 8.3 per cent, the rise in the chocolate prices was significantly higher at 15.3 per cent.

Cocoa prices have been driven up by poor harvests in West Africa, which produces the bulk of global supply.

The El Niño weather phenomenon has been causing drier weather in Ghana and Ivory Coast, which are the world’s two biggest producers of cocoa beans.

Hotter temperatures and shifts in rainfall patterns caused by climate change can also have an impact on harvests.

“Traders are worried about another short production year and these feelings have been enhanced by El Niño that is threatening West Africa crops with hot and dry weather,” said Jack Scoville, an analyst at Price Futures Group.

According to experts, Cocoa is extremely vulnerable, as it is very sensitive to any kind of weather changes, especially warmer weather. Hotter and drier weather can also bring diseases to the crops causing a poor harvest and potentially having long-term effects on the quality of the farming land.

Global deficit

In number two producer Ghana, production is expected to hit half a million tonnes at best. That would be more than 150,000 tonnes down on the previous year.

There’s concern over the crop in top producer Ivory Coast too. Last week, a Reuters poll forecast a global deficit of 375,000 tons in total. That leaves firms scrambling for supplies, and shoppers feeling the pinch.

Data from consumer tracking company NIQ shows US chocolate prices rose 11 per cent at the end of January.