Cocoa prices (CC=F) briefly hit an all-time high on Tuesday, reaching over $10,000, as consumer strength remains high and supply is constrained. According to a Bloomberg report, poor crops in key West Africa growers are in part responsible for what could be the third straight annual supply deficit for the world.

Yahoo Finance Reporter Brooke DiPalma joins the Live show to discuss cocoa price drivers and their impact on confection makers.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

JOSH LIPTON: Take a look now at Cocoa prices hitting a record as the commodity breaks above the $10,000 mark for the first time. Move higher in prices comes as Cocoa faces supply constraint. Let's chat Cocoa, Akiko, for a second.

So this has just been a red hot rally. What is going on here? Apparently, we got poor crops in West African growers. And so per Bloomberg, we could be looking at a third straight annual supply deficit.

AKIKO FUJITA: Higher chocolate prices.

JOSH LIPTON: That's right.

AKIKO FUJITA: That's going to get a lot of people's attention.

JOSH LIPTON: For sure. And I guess it sounds like from what I'm reading other growers like Brazil and Ecuador, you're kind of trying to hopefully ramping up production. But obviously, that's not just a switch you can flip.

AKIKO FUJITA: Yeah, that's going to be a big concern, especially with some of these brands. And here with more on how this is affecting confection makers. Let's bring in Yahoo Finance's Brooke DiPalma. Brooke, I know you've been talking to some of these companies. What are you hearing about how this is going to affect prices?

BROOKE DIPALMA: Yeah. Good afternoon, Akiko. Well, confection makers like Hershey's and Mondelez are really looking to navigate the impact of higher ingredient costs, particularly Cocoa. And one analyst actually downgraded shares of Hershey's citing the recent surge of Cocoa. That was once expected to be transitory. Well, could now be here to stay.

Another expert telling Yahoo Finance it will likely be a couple of years of elevated prices due to the particular life cycle and weather conditions needed for these cocoa trees to mass produce and thrive. And both companies though are preparing for this lingering impact in a call.

Hershey's CEO told investors that Cocoa is expected to limit earnings growth this year and plans to use every tool in its toolbox like pricing, believe it or not, to manage this headwind. While Mondelez shared a similar anecdote and reportedly could change the size of its packaging. And, of course, we've been hearing so much about that what many call shrinkflation.