Cocoa prices reached $10,000 per ton for the first time in history

Cocoa prices hit record levels on Tuesday as supply constraints push prices higher.

Futures for May delivery rose 3.9% to $10,030 a metric ton, marking the first time the commodity has crossed the $10,000 mark. Cocoa prices have fallen sharply this year, rising nearly 138%.

Difficult weather conditions and disease have affected production in West Africa, where about 70% of the world’s cocoa is produced. The two largest producers, Ivory Coast and Ghana, have been hit recently by a combination of heavy rains, dry heat and disease.

Heavy rains and the spread of black pod disease in two countries affected farming late last year, according to a November report from the International Cocoa Organization. Poor road conditions also made it difficult to transport available beans to the port, according to the report.

“As these two leading producing countries supply about two-thirds of the world’s cocoa beans, any changes in their production tend to have a significant impact on the cocoa market,” ICCO said.

Arrivals at ports in Ivory Coast and Ghana are down 28% and 35% respectively since the start of the season compared to the same period last year, according to ICCO’s February report.

Hershey is forecasting flat earnings growth this year due to rising cocoa prices. The company reported fourth-quarter net income of $349 million, down about 12% from the same period last year.

“Looking at these record cocoa prices, we see that this is certainly a dynamic market and it’s a challenge, but we’ve experienced market volatility and fluctuating raw material costs before,” Hershey CEO Michelle Buck told CNBC in February.

“We have a good hedging strategy and we have really good visibility into the prices of these resources in 2024,” she said.

Correction: Cocoa prices have risen more than 100% this year. In the previous version, this step was worded incorrectly.