Sept. 13 - You may pay more for Christmas chocolates due to higher demand and tight supplies of cocoa. Fred Katayama reports.
That melt-in-your-mouth chocolate could soon melt your wallet. Cocoa bean prices have risen 27 percent in six months. And its by-product, cocoa butter, that key ingredient that gives chocolate that melting texture, has nearly doubled in price. Driving them higher: tight supply of beans. Lack of rain cut cocoa production in the Ivory Coast. Sterling Smith is a futures specialist at Citigroup. SOUNDBITE: STERLING SMITH, FUTURES SPECIALIST, CITIGROUP (ENGLISH) SAYING: "We have weather issues going on in central West Africa. Most of the cocoa in the world, 70 percent, is grown in a small area stretching from the western edge of the Ivory Coast moving east through Ghana. And this area has received about half as much rain as it normally does. And this has elevated cocoa futures." Add to that greater demand from consumers for chocolate as the economy recovers. SOUNDBITE: STERLING SMITH, FUTURES SPECIALIST, CITIGROUP (ENGLISH) SAYING: "Cocoa is a direct benefactor. That is, people have a little bit more money in their pockets. They're much more willing to spend. The second thing is, we're seeing better demand for cocoa and chocolate items coming out of Southeast Asia and Asia as a whole. And this is in turn creating more demand for a product that has a limited growing area." Smith says that it usually takes four to seven months of elevated cocoa butter prices before consumers have to pay more for chocolate. SOUNDBITE: STERLING SMITH, FUTURES SPECIALIST, CITIGROUP (ENGLISH) SAYING: "We've been in an elevated cocoa butter situation for four to five months, so I would suspect as we start to move toward the Christmas period and certainly by the time we get to Valentine's Day, we are going to be looking at chocolate prices being a little bit more elevated than what they were year over year." Chocolate makers wouldn't comment on whether they'll raise retail prices. But Smith says if the weather and crop situation in western Ghana gets worse, the price on that $1 candy bar could shoot up to $1.25. How bittersweet.