Valentine's Day Chocolate This Year Isn't So Sweet As Cocoa Inflation Tops 100%

Bad news for those planning to gift their sweetheart a box of chocolate this Valentine’s Day.

The price of cocoa, the crucial ingredient for chocolate, has surged over 100% since last year.

Cocoa, a regulated commodity that trades on the Intercontinental Exchange (ICE) under the ticker CC, saw its spot price rising to over $5,500 per tonne recently, doubling from a year ago.

West Africa, accounting for three-quarters of the world’s cocoa production, is facing supply challenges. The leading producers, Ivory Coast and Ghana, are dealing with diseases and the dry Harmattan winds, adversely affecting crop quality and yield.

Ghana’s output is expected to hit a 13-year low, with Ivory Coast’s output at a seven-year minimum. Adding to the woes, recent surges in freight rates, especially due to tensions in the Red Sea area, could impact international trade, making the high cocoa prices even more burdensome for users and potentially affecting demand.

Chart: Cocoa Prices Are Skyrocketing, Turning Your Valentine’s Day From Sweet To Bitter

America’s Chocolate Consumption And Investment Opportunities

The U.S. boasts the largest chocolate market globally, with an annual valuation exceeding $20 billion. In terms of cocoa imports, the U.S. primarily relies on Canada (30%), Côte d’Ivoire (12.8%), and Mexico (10.1%).

Investments in cocoa-related exchange-traded funds (ETFs) that track cocoa prices are off the table for U.S.-based investors due to their absence on the NYSE Arca exchange.

Investors can consider companies like Mondelez International Inc. MDLZ, which owns renowned chocolate brands such as Cadbury and Milka; The Hershey Company HSY, a leading confectionery manufacturer in the U.S.; and Lindt & Sprüngli AG, noted for its premium chocolates, although its primary listing is outside the U.S. LDSVF

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Image by Jill Wellington from Pixabay