Guan Chong Bhd., one of the world’s biggest cocoa processors, is scouting for beans worldwide as bad weather and disease pummeling crops in top West African growers send prices to a record.

The Kuala Lumpur-listed company is looking to procure cocoa from countries such as Ecuador, Peru and Indonesia — all minor growers — and paying premiums to book their beans. That’s due to worries that some sellers in heavyweights like Ivory Coast and Ghana may default on supply contracts.

“Everybody is panicking,” Brandon Tay Hoe Lian, chief executive officer of the firm, said in an interview in Kuala Lumpur. Prices are going higher every day, but the beans are not coming, he said. “We not only have to fight for beans, we’re also paying premiums.”

The world is heading for a third year of supply deficit because of poor harvests in major growers. The shortages, which coincide with rising seasonal demand for chocolate, have sent futures to an all-time high. Cocoa has seen wild price swings and huge premiums for near-term supplies. 

Guan Chong’s factories are still running and it is “comfortably” and “sufficiently” covered for the rest of the year, Tay said. But it’s continuously checking with suppliers to ensure deliveries, and also looking for more beans to avoid situations like contract defaults, he said.

Grinders are forking out huge premiums to secure beans to prevent any plant closures, he said. These spreads are now reaching to about $400 a ton in Ecuador and Peru, and at least $500 in Indonesia. In Ivory Coast, buyers are paying as much as £2,000 ($2,542) extra, he said.

The company sells products like cocoa powder and butter, which give chocolate its smooth taste and texture. But the global shortfalls of beans mean it’s starting to limit sales.

“We are quite skeptical about selling a lot because we’re worried whether the beans will be delivered,” Tay said. “I rather sell the minimum, just in case, as long as my cashflows are healthy. I don’t want to commit to something that I cannot deliver.”

Unprecedented Times

The most-active cocoa contract in New York rose to $8,493 a ton this week, the highest on record. The rally isn’t over, Tay said. “There’s a lot more room to go higher.” 

Citi Research analysts said that prices could reach as high as $10,000 a ton and remain elevated until the second half of 2025. BMI hiked its average price forecast last week for ICE-listed second-month futures by 60% to $6,000 a ton.

Tay said that he had not seen such frantic trading and supply problems in his three-decade long career in the cocoa industry. The company has increased hedging in futures and options to mitigate risks. 

“People say we shouldn’t panic,” Tay said. “But the reality is we don’t see beans coming. When we ask people for supply, they tell us to wait.”

Guan Chong, which began as a family business in early 1980s in the southern state of Johor, has processing facilities in Malaysia, Indonesia, and Ivory Coast with a combined annual processing capacity of 350,000 tons. It’s the world’s biggest grinder after Barry Callebaut AG, Cargill Inc. and Olam International Ltd.