Cocoa GettyImages-1324447312

Confectioners have been facing raw material price volatility in recent years, as a range of factors – from the pandemic to climate change – have hurt supplies and disrupted global supply chains.

Respective spot market prices for milk chocolate’s three main ingredients – sugar, milk and cocoa beans – were up 34.6%, 108.3% and 9% at the end of August compared with August 2020, according to data compiled by Mintec.

While all manufacturers have forward contracts for raw materials, these numbers still give an indication of the ever-increasing squeeze.

“The monthly average price for sugar in July 2022 in London increased by $78.80 per metric tonne or 17.3% year on year, underpinned by the inflationary global environment, particularly the higher fuel, energy and labour costs of processing,” says Mintec senior market analyst Jara Zicha.

The July average Mintec Benchmark Prices for UK milk have also continued to rise to record highs. This is in line with rising input costs for farmers.

“The UK milk flush ended in May with a lower-than-expected output, while July’s production decreased further, down 2% year on year,” Zicha says. “Consequently, milk rose to £558 per metric tonne, up 8.1% month on month.”

Meanwhile, concerns over cocoa bean supplies from west Africa and rising cost fundamentals pushed the price up by 1% month on month in London. “With the International Cocoa Organisation stating that production of cocoa beans is expected to decline by 6% to 4.9 million tonnes this year, the category is facing real pressure,” confirms Monty Bojangles founder and MD Andrew Newlands.

On the upside, prices have been easing for other key confectionery ingredients. The EU palm oil Mintec Benchmark Price continued to decline in July, reaching a 2022 low.

It fell 19% month on month in July, but was still up 41.6% year on year.

Supply from Indonesia is increasing and there are efforts to “offload supply at low prices,” says Zicha.

“The country continues to face a supply glut due to the export ban implemented in April 2022,” he explains.

Rapeseed oil prices, meanwhile, fell 15.6% month on month in July due to subdued demand, though they were up 43.3% year on year.