What’s going on here? Cocoa prices hit a new record high this week, as if to celebrate the season of overpriced chocolate eggs. What does this mean? Cocoa’s new price either means the new Willy Wonka film has sparked insatiable chocolate cravings, or that investors reckon supply is about to run low. See, like most commodities, the price of cocoa is determined by the futures market, where investors trade contracts that bind them to buying or selling cocoa beans at a set price on a future date. Those futures prices have tripled over the last year, reaching over $10,000 per metric ton this week – meaning humble cocoa beans are now more expensive than copper, the bellwether of industrial metals. That’s likely down to the news that bad weather and disease have ravaged cocoa crops in Ghana, leaving the world’s second-biggest cocoa producer without enough beans to secure the funding cocoa farmers need for the next harvest. Why should I care? The bigger picture: There’s magic in the trees – or there used to be. Demand for cocoa has doubled over the past 30 years, but the industry hasn’t won enough investment to keep pace. There hasn’t been a major planting of cocoa trees in West Africa, where the vast majority of the beans are grown, since the early 2000s. At nearly 25 years old, those trees aren’t producing enough fruit and are increasingly vulnerable to drought and disease. That’s why the cocoa market is looking at the biggest gap between supply and demand in more than six decades. For markets: Chocolate’s a luxury. Chocolate brands will try their best to pass higher prices onto their customers, but even the sweetest-toothed shopper will have their limit when it comes to spending on snacks. That means firms like Hershey, Mondelez, and Nestlé may well need to keep prices competitive while paying more for their ingredients, sacrificing their profit margins in the process. | 
