Valentine’s Day: Strawberry and Chocolate Prices

Spend Matters welcomes this guest post from Rutika Ghodekar and Corrina Hutchings, market analysts at Mintec.

With Valentine’s Day upon us, it’s time to start thinking about how to treat your loved one. The celebration of Valentine’s Day is an old tradition that is believed to have originated from Rome, though nowadays it is becoming more infamous with its commercial impact on our wallets.

If you search online for romantic foods, chocolate covered strawberries are top of nearly every list. They are a great snack to share with your partner or with your friends over a movie while you share a bottle of champagne to celebrate love and friendship. They are indulgent without ruining all that hard work you’ve been doing for your New Year’s resolutions to work on your waistline. But will they break the resolution on saving those pennies?

Let’s take a look at what’s been happening in our favorite Valentine’s commodities.

Chocolate

Chocolate prices are currently up 10% from the start of 2018; however, they remain low compared with the start of 2017 and 2016. This is due to high production in 2016 and 2017, which saw a surplus of supply in the market place. Global cocoa bean production is still estimated at a 19% increase year-over-year for 2016/2017, outweighing current demand. Consumer demand, however, is increasingly leading to the recent peak in prices. Global grindings were up in 2016/2017, by 5% y-o-y, and this trend is expected to continue into 2017/2018.

Production is not looking to be as abundant in 2017/2018 either, due to the recent heavy rains seen throughout the main growing regions in the Ivory Coast. The quality of the beans has also caused concerns due to a lower fat content, which means that a higher quantity of beans needs to be grinded to meet demand. The cocoa trees in both the Ivory Coast and Ghana are ageing, with over 20% of Ghana’s trees now being over 30 years old, causing yields to decrease rapidly.

Despite the negative start to the current season in West Africa, however, La Nina weather conditions are forecast for 2017/18. Characterised by cooler ocean temperatures, La Nina has previously been advantageous to cocoa productions in the main growing regions throughout the Ivory Coast and Ghana.

Strawberries

U.S. strawberry prices are 11% higher compared with the same time last year. Although there has been adverse weather conditions in U.S., the supply has been able to fulfil the demand in the market. The recent snowfall in the country did have a major impact on the cultivations, but low temperatures are the main reason to worry.

Growers in Florida are trying to harvest the strawberries earlier than the actual harvest schedule, in attempt to avoid the further production loss. Also, the labor costs involved in managing the final produce boosted prices, keeping them slightly above the seasonal average. Furthermore, Argentinian strawberries have already started to enter the U.S. market due to the exclusion from General System of Preferences (GSP). In 2012, Argentina was suspended from the GSP and was prevented from entering U.S. market tariff free. These strawberries coming from Argentina are now tariff free, making the market more competitive, thus reducing the prices.

So for this Valentine’s Day, it may be worth having one more chocolate covered strawberry — just in case.