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What’s going on here?

Cocoa prices hit a new record high this week, as if to celebrate the season of overpriced chocolate eggs.

What does this mean?

Cocoa’s new price either means the new Willy Wonka film has sparked insatiable chocolate cravings, or that investors reckon supply is about to run low. See, like most commodities, the price of cocoa is determined by the futures market, where investors trade contracts that bind them to buying or selling cocoa beans at a set price on a future date. Those futures prices have tripled over the last year, reaching over $10,000 per metric ton this week – meaning humble cocoa beans are now more expensive than copper, the bellwether of industrial metals. That’s likely down to the news that bad weather and disease have ravaged cocoa crops in Ghana, leaving the world’s second-biggest cocoa producer without enough beans to secure the funding cocoa farmers need for the next harvest.

Why should I care?

The bigger picture: There’s magic in the trees – or there used to be.

Demand for cocoa has doubled over the past 30 years, but the industry hasn’t won enough investment to keep pace. There hasn’t been a major planting of cocoa trees in West Africa, where the vast majority of the beans are grown, since the early 2000s. At nearly 25 years old, those trees aren’t producing enough fruit and are increasingly vulnerable to drought and disease. That’s why the cocoa market is looking at the biggest gap between supply and demand in more than six decades.

For markets: Chocolate’s a luxury.

Chocolate brands will try their best to pass higher prices onto their customers, but even the sweetest-toothed shopper will have their limit when it comes to spending on snacks. That means firms like Hershey, Mondelez, and Nestlé may well need to keep prices competitive while paying more for their ingredients, sacrificing their profit margins in the process.

What’s going on here?

CATL – the world’s biggest electric vehicle (EV) battery maker – cozied up to America’s battery-powered darling, Tesla.

What does this mean?

CATL is the picture of optimism these days, believing that hot-to-the-touch geopolitical relationships will blow over, leaving the world to unite over the healing powers of green energy. So to make money from that feel-good future, the battery maker is signing deals with major US carmakers like Tesla. That will play out like its contract with Ford: CATL shares the know-how behind the battery tech, and then pockets the royalties every time Ford cranks out a battery in the US – all without the costs and admin of opening its own factories in the land of opportunity.

Why should I care?

Zooming out: Choose your partner carefully.

Mind you, this isn’t a seamless plan. The US Inflation Reduction Act is working on making the stateside EV supply chain less dependent on Chinese companies. So even if a company is tempted to partner with CATL, it’ll have to weigh up the prospect of reworking its supply chains if the rules come down hard on the Chinese battery maker. According to Morgan Stanley, that could mean CATL captures just 3% of the US market – basically zilch compared to the 35% share it’s expected to hold in Europe by 2030.

The bigger picture: Shopping local adds up.

The battery is the most expensive part of an EV. No wonder, then, that CATL’s reputation for making top-quality batteries on the cheap has won it almost half of the Chinese market and contracts with Tesla, Volkswagen, Daimler, and Toyota. In fact, SNE Research pointed out that one in three new EVs were powered by CATL's lithium-ion batteries last year. So if CATL’s kicked out of the US and carmakers can’t find a replacement for the same price, EVs may be even more expensive for companies to make – and for stateside drivers to buy.