Swiss Chocolatier Warns High Cocoa Prices Resulting In Global Slowdown In Chocolate Market

Chocolate maker Lindt & Spruengli AG has warned the global chocolate market is under strain due to high prices. Reducing demand is necessary to prevent cocoa prices from surging once again amid persistent cocoa supply issues stemming from adverse weather conditions impacting some of the world’s largest farms in West Africa. 

Bloomberg reports that Lindt CEO Adalbert Lechner told investors during an earnings call on Tuesday that the global chocolate market was experiencing a slowdown for some products due to rising cocoa prices. He said price hikes for consumers partially offset higher cocoa bean costs for the Swiss chocolatier and confectionery company, adding that cost inflation will ramp up into next year. 

“It is quite difficult to predict where the futures market will go from here and how quickly we will see a further correction,” Lechner told investors.

He said, “The speed and the extent of the market correction will also depend a lot on the impact of the overall volume demand in the chocolate market.”

Cocoa futures in New York have been oscillating in what some call a ‘symmetrical triangle’ since prices peaked at $12,000 a ton in April. This followed a massive run-up early this year fueled by a historic shortage in West Africa due to poor harvests. The $8,000 level is a price magnet as traders wait for new harvest or demand data. 

“It is still early in the season” to predict harvest figures, “which may keep the market in a back-and-forth pattern,” according to a Tuesday ADM Investor Services note.

Here are the latest cocoa reports:

• Cocoa Traders Face Billion Dollar Loss As Ghana Throttles Cocoa Delivery Supplies, Report Says
• Cocoa Grinding Estimates Suggest Demand Destruction Nearing
• Cocoa Prices Fall To Critical Technical Support Level On Improving Ivory Coast Outlook
• Global Cocoa Shortage Much Worse Than Previously Forecasted As Prices Surge

Cocoa prices have been supported by better-than-expected demand and poor harvest figures. Some analysts believe prices might need to go higher to achieve proper demand destruction.