US demand for chocolate drives up cocoa prices
With the US devouring candy over the Christmas/Halloween season and the Valentine’s Day and Easter holidays coming up, the knock-on effect is a rise in cocoa prices, with the futures market in New York touching a two-month high earlier this week.
Bloomberg reports the rally is a turnaround for cocoa, which was one of the worst commodity performers last year amid ample supplies. March futures climbed as much as 3.1% to $2,598 a pound, the highest for a most-active contract since 1 November. The contract breached its 100-day moving average, a bullish technical signal.
“Ironically, that oversupply is now helping chocolate, since it’s one of the few commodities that hasn’t seen inflation and remains relatively cheap. That’s helping the industry avoid the challenges of higher costs, which is hurting other sectors,” it reports.
According to IRI consumer research in the US, chocolate remained the biggest contributor, holding 58% of sales, and touching $16.7bn.
The National Confectioners Association’s Candy & Snack publication reports that non-chocolate was the fastest-growing segment in 2021, with an impressive 14% increase in dollar sales, while gum completed its comeback and ended the year in the plus, with gains of 3% versus 2020.
Market analyst Anne-Marie Roerink of 210 Analytics, LLC, said that while 2021 marked a record year for the category, inflation played a major role in the comeback.
“However, both the chocolate and non-chocolate sectors recorded increases in unit and volume sales, demonstrating that consumer demand is robust,” she said.
Roerink also said the outlook for continued strength in the first quarter of 2022 is strong as gains accelerated towards the end of 2021.