Jeff Koeze's Blog Good Food, Good Business, and the Good Food Business

16Feb/090

Cocoa, Sugar Prices Soaring

From the February 13, 2009 Wall Street Journal:

While prices for many commodities have fallen, a supply shortage caused in part by crop diseases in Ivory Coast and Ghana sent cocoa up 38% from its lows in November, to $2,644 a metric ton on Thursday. The price of sugar, another raw material, is up 23% since October to 13.13 cents a pound, the result of a smaller-than expected crop in India, the No. 2 producer after Brazil.

The International Cocoa Organization predicts that supply will fall faster than demand in the global cocoa market, which is likely to push prices still higher. Chocolate makers usually buy cocoa butter, cocoa liquor or powder from processors, who purchase cocoa beans at market prices and tend to quickly pass on the price moves.

Cocoa surged 65% in the first half of 2008, to a 28-year high of $3,360 a ton on July 1, before falling back and then climbing again.

In a deflationary enviroment it is tough to be in a business where costs are still shooting up.

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