The saying "money doesn't grow on trees" couldn't be more wrong, especially with how cocoa prices continue rising. To put it better, they are skyrocketing, costing more than copper - over $9,600 per metric ton.

But what's the problem - has a sort of OPEC-style chocolate cartel emerged?

Fortunately, no.

It's about crop failures, smuggling, and this nasty swollen sprout disease that wreaks havoc. Nevertheless, these factors do not solely dictate market movements; various economic events also play a crucial role. Successfully navigating markets requires vigilant monitoring of such events, which can be achieved through the use of an economic calendar.

And, of course, the disastrous market system that has locked in purchase prices for beans from farmers a year in advance.

Then there is the other big problem: years of underinvestment and speculation.

Cocoa production has lagged behind growing demand, nearly doubling in the last two decades. As for the latter, it is estimated that hedge funds have accumulated an $8.7 billion bet on new profits, the largest in history.

How long can this upturn last?

In addition to the fact that the value of cocoa has almost tripled in just one year and that there has to be a correction at some point, the cocoa futures curve shows pullbacks, i.e., future prices below current prices. Just six months ago, everything was flat, even lower.

Thus, we could deduce that there is an expectation in the market that demand will decrease as prices rise and producers will produce more, which will lower prices. Moreover, it is doubtful that manufacturers will buy the products at such high prices.

That said, probably in the next six months to a year, we could see prices come down.And what about chocolate prices around the world?

They are already on the rise. Nestlé, for example, has just launched tablets in the UK that are two-thirds lighter than its competitors, while some confectionery manufacturers are replacing chocolate with cheaper peanut oil and caramel to cut costs.

But Europe is in for a shock.

Since December 30, local authorities have demanded proof that imported cocoa beans have not contributed to forest clearing. If they fail to prove it, cocoa consumption will be banned, and heavy fines will be imposed. Guess who will foot extra expenses? Yes, the consumers.

And if companies try to squeeze profits from farmers, they will try to ship non-compliant farmers to the United States and Asia. Europe, in turn, will face a supply shortage, with a consequent increase in domestic prices.

But what if cocoa bean prices continue to rise?

Trying to figure out how much cocoa futures drive inflation is like trying to read a crystal ball. So, let's avoid jumping to conclusions about their impact on monetary policy. But one thing is sure: chocolate lovers are in for a bumpy ride.