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Chocolate Easter egg prices set to rise as cost of cocoa surges

chocolate PRODUCTION - 30 March 2023, Bavaria, Garmisch-Partenkirchen: A confectioner pours chocolate into a
Lack of cocoa is driving a surge in chocolate prices. (picture alliance via Getty Images)

Chocolate lovers are facing pricier Easter eggs as global cocoa prices hit fresh record highs.

Cocoa prices have surged to all-time highs as bad weather conditions hammer crop yields in West Africa, home to three quarters of the world’s production

Analysts are warning that higher costs for chocolate makers could filter through to retail shelves ahead of Easter.

Jane Foley, head of FX Strategy at Rabobank, told the BBC Radio 4 Today programme: “We have seen soybeans come down a lot, wheat is relatively flat but if we are looking ahead to Easter and Easter eggs, well we can expect chocolate to be more expensive because the prices for that have soared."

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Cocoa futures prices (CC=F) have surged more than $3,800 (£2,994) or nearly 40% in the past 12 months to $6,553 per metric ton Tuesday.

Cocoa processors, who turn beans into cocoa butter, are scrambling to find enough supply to meet demand from chocolate makers.

Jeremy Naylor, analyst at IG, also warned that customers will see a pricier Easter eggs or smaller ones being sold at the same price as before.

“The price of Easter eggs is going to be higher this year because the cost of cocoa beans, the main ingredient in chocolate, has gone up a lot. This increase in price is much higher than the usual inflation we see every year,” he said.

“In order to deal with this increase in price, some companies that make Easter eggs may decide to make the eggs smaller. This way, they can still sell them at a price people can afford. This is called "shrink inflation." So, when you go to buy Easter eggs this year, don't be surprised if they are smaller than usual,” he added.

Read more: Food price inflation eases to nearly two-year low

Hershey (HSY), one of the world's biggest chocolate manufacturers, warned earlier this month: "Historic cocoa prices are expected to limit earnings growth this year."

Hershey's boss, Michele Buck, also did not rule out putting up prices for customers.

"We can't talk about future pricing," she said in a call with analysts. "Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business," she added.

Cadbury (KTF.F) and Nestlé (NESN.SW) have both also warned that they may have to raise prices or shrink its products “as a last resort”.

Saxo Bank’s head of commodity strategy Ole Hansen said the shortages have “raised concerns about the availability of cocoa to meet already agreed sales obligations, potentially leaving some of the major chocolate producers shortchanged”.

Watch: Missoula home to pair of artisan chocolate makers

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