Shifting weather patterns have affected African harvests, resulting in yet another jump in cocoa prices, the Financial Times reports.
Cocoa futures reached dizzying prices on Tuesday, more than twice as high as February, and reached as high as $10,080 in New York.
Cocoa bean traders are ‘bracing for impact,’ said Andrew Moriarty, price reporting manager at Mintec, a commodities data group, adding that the market is ‘out of control’.
Ghana and Ivory Coast have been struggling with poor crop yields in the past months, largely affected by unfavorable weather conditions in addition to disease of the cocoa trees.
“From the [cocoa] processors all the way down to the [chocolate] manufacturers, all of them are very, very low on cover,” Moriarty added, per FT.
Swiss bulk chocolate maker Barry Callebaut, said it expected “an industry-wide impact on working capital requirements,” adding that the company has issued $663 million in bonds to refinance securities due in May, as well as increasing a credit line and securing another loan, the Economic Times reports.
The company’s shares have gone down by at least 30% recently, while Dutch cocoa trader Tradin Organic reported that “materially impacted by the unprecedented increase in cocoa prices, resulting in lower demand and hedging losses,” ET added.