Cocoa prices have risen faster than bitcoin

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Chocolate Easter bunnies wait to be decorated at a shop in Belgium. Virginia Mayo/AP hide caption

Chocolate Easter bunnies wait to be decorated at a shop in Belgium.

Cocoa prices are going nuts: The bean is now more valuable than several precious metals and has surged faster than even bitcoin.

After cocoa passed the all-time record it hit in 1977 of $5,400 per metric ton, right before Valentine's Day – melting not just hearts but also wallets – one of the cocoa prices this week topped a whopping $10,000 per metric ton. Just in time for chocolate Easter bunnies.

To sum it up, cocoa prices have more than doubled in the first three months of the year and more than tripled in the past 12 months.

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Why is this happening?

It all boils down to a dramatic drop in supply. The world is facing the biggest deficit of cocoa in decades. Most cocoa beans are grown in West Africa, where extreme weather and changing climate patterns have upended crop harvests, which are forecast to fall short for the third year in a row.

That means another year of higher prices for makers, sellers and, ultimately, eaters of chocolate. Chocolate bunnies and eggs are expected to be pricier this Easter and perhaps for some time to come. Shoppers are still expected to splurge on the holiday, but can anticipateto get less for what they pay for.

Cocoa beans dry in West-Central Ivory Coast in November. Sophie Garcia/AP hide caption

Roughly two-thirds of the world's cocoa is grown in West Africa, most of it in Ivory Coast and Ghana.

And farmers there have faced extreme weather brought by changing climate patterns for a few years: heavy rains and flooding, high winds during the dry season — wrong conditions at the wrong time of year. This has worsened crop disease and also road conditions, disrupting bean deliveries to ports.

The International Cocoa Organization forecasts that global cocoa supply will decline by almost 11% this season. Other cocoa-growing countries have been unable to fill the gap because ramping up production is expensive and time-consuming; it takes years for newly planted trees to produce cocoa beans.

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The extensive shortfall of cocoa has sent buyers scrambling, pushing prices up. And the historic rally has drawn in speculators, exacerbating the price volatility.

"Normally ... if prices are very high, people start producing more of that commodity," says John Ament, an independent consultant who's the former head of cocoa operations at Mars. "That is not as quick with cocoa. So I think these prices are going to stay higher than they were for a while."

Ament says the damaging weather compounded other preexisting problems. Trees in West Africa have been aging and yielding less cocoa; farmers in Ghana and Ivory Coast have struggled to battle pests and disease.

In fact, those farmers rarely benefit from the surging cost of cocoa in the market, because they typically pre-sell the beans at agreed-upon prices in advance.