Halloween Candy Prices Set to Spook Consumers
As Halloween approaches, consumers should brace themselves for higher prices for chocolate candy bars from major brands like Hershey's, Nestle, Mars, and Cadbury. This is due to the doubling of cocoa prices this year, resulting from a supply crisis in West Africa, a leading cocoa-producing region, which has significantly affected global production.
David Branch, a Wells Fargo Agri-Food analyst, has warned clients about a potential price spike for chocolate candy bars this Halloween. He attributes this to the ongoing issues with crop conditions in West Africa, including disease and drier conditions, which suggest that the harvest will continue to be low and manufacturing costs for candy bars will remain high.
Branch also projected that the 2025 cocoa harvests will fall short for the third consecutive year. He added that "it's likely that cocoa prices will remain high at least through the next crop year ending September 2025."
Cocoa futures in New York have seen a significant increase, jumping from $4,000 per ton to a high of $12,000 earlier this year. Since peaking in April, prices have consolidated around $7,000, indicating that prices could rise further in the coming months if supplies continue to be low and grinding data remains high across the West and Asia.
John Caruso, a senior market strategist at RJO Futures, highlighted the ongoing challenges, stating, "A lot of those issues remain, and there's no quick fix to aging cocoa trees."
Branch further emphasized the severity of the situation, noting that "Warehouse stocks are at 50 year lows, they've been declining for the last 15 months. The lower production has the market in turmoil, and as a result, we've seen futures prices just skyrocket over the last two years because chocolate demand, for cocoa flavors and confectionery, is still going up year-over-year."
Despite the grim harvest data and low supplies, grinds in Asia have increased by 2.6% in the third quarter compared to last year. In Europe, grinds were down by 3.3%, while in North America, grinds were up by 12%. Traders use grinds as a measure of demand.
Tracey Allen, an agricultural commodities strategist at JPMorgan, commented on the situation, stating, "Consumers have not been willing to temper their insatiable chocolate appetite too much. Cocoa demand has been resilient in the face of historically high prices and a supply squeeze through the year."
She also mentioned that traders are now focusing on the outlook for the 2024-25 season and the upcoming crop harvests.
A recent National Retail Federation survey indicated that Americans are reducing their spending on Halloween due to the ongoing inflation. This marks the first decline in consumer spending for the holiday since the onset of the Covid lockdowns.
Food inflation continues to be a significant concern, with global prices experiencing the most significant jump in 18 months in September. This situation suggests that consumers may need to start sourcing food locally or even consider starting their own farms.
Bottom Line
The rising cost of Halloween candy is a clear reflection of the broader issue of food inflation, which shows no signs of abating. How will this impact your Halloween celebrations, and what measures are you taking to cope with the escalating prices? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
Halloween Candy Prices Set to Spook Consumers
As Halloween approaches, consumers should brace themselves for higher prices for chocolate candy bars from major brands like Hershey's, Nestle, Mars, and Cadbury. This is due to the doubling of cocoa prices this year, resulting from a supply crisis in West Africa, a leading cocoa-producing region, which has significantly affected global production.
David Branch, a Wells Fargo Agri-Food analyst, has warned clients about a potential price spike for chocolate candy bars this Halloween. He attributes this to the ongoing issues with crop conditions in West Africa, including disease and drier conditions, which suggest that the harvest will continue to be low and manufacturing costs for candy bars will remain high.
Branch also projected that the 2025 cocoa harvests will fall short for the third consecutive year. He added that "it's likely that cocoa prices will remain high at least through the next crop year ending September 2025."
Cocoa futures in New York have seen a significant increase, jumping from $4,000 per ton to a high of $12,000 earlier this year. Since peaking in April, prices have consolidated around $7,000, indicating that prices could rise further in the coming months if supplies continue to be low and grinding data remains high across the West and Asia.
John Caruso, a senior market strategist at RJO Futures, highlighted the ongoing challenges, stating, "A lot of those issues remain, and there's no quick fix to aging cocoa trees."
Branch further emphasized the severity of the situation, noting that "Warehouse stocks are at 50 year lows, they've been declining for the last 15 months. The lower production has the market in turmoil, and as a result, we've seen futures prices just skyrocket over the last two years because chocolate demand, for cocoa flavors and confectionery, is still going up year-over-year."
Despite the grim harvest data and low supplies, grinds in Asia have increased by 2.6% in the third quarter compared to last year. In Europe, grinds were down by 3.3%, while in North America, grinds were up by 12%. Traders use grinds as a measure of demand.
Tracey Allen, an agricultural commodities strategist at JPMorgan, commented on the situation, stating, "Consumers have not been willing to temper their insatiable chocolate appetite too much. Cocoa demand has been resilient in the face of historically high prices and a supply squeeze through the year."
She also mentioned that traders are now focusing on the outlook for the 2024-25 season and the upcoming crop harvests.
A recent National Retail Federation survey indicated that Americans are reducing their spending on Halloween due to the ongoing inflation. This marks the first decline in consumer spending for the holiday since the onset of the Covid lockdowns.
Food inflation continues to be a significant concern, with global prices experiencing the most significant jump in 18 months in September. This situation suggests that consumers may need to start sourcing food locally or even consider starting their own farms.
Bottom Line
The rising cost of Halloween candy is a clear reflection of the broader issue of food inflation, which shows no signs of abating. How will this impact your Halloween celebrations, and what measures are you taking to cope with the escalating prices? Share your thoughts and this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
