%Cocoa prices have surged to an all-time high on news that bad weather has devastated the crop in West Africa, which is home to three quarters (75%) of the world’s production.
Cocoa prices have risen more than $1,000 U.S., or nearly 40%, since the start of the year to hit an all-time high of $5,874 U.S. per metric ton.
Extremely dry temperatures in West Africa are hurting crop yields in Ghana and the Ivory Coast, which are the two largest producers of cocoa beans, the main ingredient in chocolate.
Rising cocoa prices are hurting companies such as %Hershey (NYSE: HSY), the chocolate and candy company that spends more than $1 billion U.S. a year on cocoa.
Hershey recently forecast that its earnings growth will be flat this year due to rising cocoa prices.
Hershey’s stock has declined 14% in the last 12 months as cocoa prices continue to climb higher.
In an interview on CNBC, commodities analyst Humza Hussain, who works at TD Asset Management, said that cocoa crop yields now look to be “permanently impaired.”
Beyond chocolate, cocoa is also used for some types of butter and in various baking products.