Things are not so sweet in candy commodity markets. A report from the European Cocoa Association, the trade group representing chocolatiers on the continent, said that the amount of cocoa beans it ground for confections in the first quarter was down 2.5% from the year before. It’s a sign that supply levels are still depressed after several quarters of reduced grinding.

Futures prices for the commodity were up almost 6% in Thursday trading to nearly $10,700 a metric ton. They’re having a better year than Bitcoin, up more than 150% this year.

Peter Feld, CEO of Swiss chocolate processor Barry Callebaut, laid out all the reasons behind the dramatic increase on an earnings call last week:

There is literally a supply reasons behind that, initially we know that the weather obviously was impacting the crop volume in Côte D’İvoire as well as in Ghana significantly in the main crop last fall, that was probably the first element.

The second element that led to these price spikes were driven by large industrial players ordering very late, actually very, very late. And that whole situation then got amplified on top by hedge fund activity that actually played on top. So the thing went vertical.

Though many chocolate companies typically hedge against volatile commodity prices by buying in bulk and in advance, that strategy can only work for so long. Feld said that the shortage, driven by alternately very wet and very dry weather driven by climate change, “has become a problem for several players in the market.” Additionally, farmers are having to deal with root diseases that the Financial Times reports they don’t have the money to address because prices were low for a long time.

Adalbert Lechner, CEO of Lindor Truffle producer Chocoladefabriken Lindt & Sprüngli, told analysts on an earnings call in March that chocolate companies can reap a little benefit from raising prices to compensate from higher costs, but only in the short term. In 2023, he said, “we saw a price-driven growth in the chocolate market in the high-single-digits, but we saw a substantial decline in volume. And this shows that consumers really showed price elasticity. They were impacted by an overall high inflation. They really had to tighten their belt.”

But Martin Hug, the company’s CFO, said that if cocoa prices don’t come down then chocolate prices will continue to go up no matter the effect on demand.

“For the future, it has to be seen what happens,” he said. “Because on the one side, I hope that we can see an increase in the crops with this higher prices that farmers have more money for fertilizers, et cetera, which actually should increase the yields again. And then the other question mark is what happens with the chocolate markets as such with the volume, because lots of the players in the chocolate markets will increase prices in 2024 and also to some extent potentially in 2025.”