As bags of trick-or-treat candy begin to appear on store shelves, their costs are on the rise, according to an analyst at a procurement intelligence firm.
Nidhi Jain, specialist at the Smart Cube, pointed to the impacts of both supply chain interruptions and unfavorable weather conditions on the prices of key ingredients, namely cocoa and sugar; the former has seen prices double since the beginning of the year.
Jain offered additional insights on both crops:
Cocoa
• London cocoa prices have increased about 100% since the beginning of the year, reaching their unprecedented high of GBP10,137/MT in April 2024 and may continue to remain elevated amid outlook of tight cocoa supplies in West Africa (Ivory Coast and Ghana) – the leading cocoa producers accounting for ~60% of the global cocoa production.
• After witnessing dry weather and diseases infestation in 2023 and H1 2024 cocoa plantations in West Africa are now struggling with rains.
• Rain makes cocoa plantations more susceptible to disease and is forcing farmers to buy protective fertilizers and pesticides, increasing the cost of production.
• Unfavorable weather accompanied with disease is likely to result in a deficit of ~0.13 million tons in the global cocoa market during marketing year 2024-25 (October 2024–September 2025) — this would mark the fourth consecutive year of deficit.
As the festive period approaches, cocoa prices are to remain elevated.
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Sugar
• Sugar prices are likely to follow an uptrend in H2 2024 (following a significant price correction in H1 2024 vs H2 2023) due to supply concerns in key sugar producing countries, Brazil and India, and a seasonal uptick in demand.
• Continued dryness in the Centre-South region of Brazil (accounting for ~90% of the country’s total sugarcane crop) and likelihood of development of La Niña weather conditions during late 2024 may have a negative impact on the country’s sugarcane yields.
• La Niña increases the risk of dry weather and below-normal rainfalls in the southern parts of Brazil.
• Indian Sugar Mills Association projects India's gross sugar production to decline 2% Y-o-Y in marketing year 2024-25, owing to reduced acreage in Maharashtra and Karnataka.
Also, likely continuation of sugar exports ban by India in marketing year 2024-25 owing to lower production and its commitment to achieve 20% ethanol blending rate by 2025-26, may create global supply pressure.
India banned sugar exports in marketing year 2023-24 as its production dropped during the year amid El Niño -induced drought conditions.
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