Chocolate prices closed just short of $3,200 per metric ton last Friday, after rising to a three-year high of $3,284 on Thursday. The Hershey Co. (NYSE: HSY) announced the week before that it was raising its candy prices 8% due to commodity price hikes for chocolate, dairy and nuts. The privately held Mars Candy Co. raised its prices 7% last Thursday as well.

In its announcement, M&M maker Mars said cocoa-bean prices have risen 18% this year as demand has outstripped supply. Dairy products and nuts are also under demand pressure and face as well drought conditions in California, which provides almost half of all U.S. production of fruits, nuts, and vegetables. The state is also the country’s leading producer of milk and dairy products, accounting for 18.6% of all dairy products in 2012.

The good news for those of us with a deeply rooted sweet tooth is that the hikes to chocolate prices may be over. Commerzbank analysts said on Friday, “There is little reason from a fundamental viewpoint for cocoa prices to keep being driven ever higher. … [T]here is also a very good mid-crop being harvested in West Africa” now. If demand and supply are in rough parity, something else must be going on.

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One possibility is that a trader purchased 3,000 contracts last Monday, betting long on the spread between September and December. That touched off the exchange of 110,000 contracts on Wednesday. Seeing the action, many traders dumped the short positions and may pick them up again before the next settlement date, betting that last week’s action was a blip. Could happen.

Another possibility is that the Ebola virus outbreak in western Africa is threatening to leave a lot of the cocoa mid-crop unharvested. Sierra Leone’s largest cocoa-producing district is also the region of the country that has been hit hardest by the virus, which has caused farmers and their families to abandon their farms in an effort to escape the disease for which there is no treatment and no cure. As of last Friday, Sierra Leone had reported 146 deaths from Ebola and 435 confirmed cases.

The Wall Street Journal reported on Friday that a greater than 40% drop in the value of Ghana’s currency is encouraging cocoa farmers to seek higher prices in Cote d’Ivoire by smuggling cocoa beans across the border to avoid the fixed prices Ghana pays producers for the beans.

If the commodity price for chocolate falls, it is pretty certain that fundamentals have once again taken over. If they continue to rise, well, who knows where they will stop.

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