Key Highlights

● Cocoa fell 0.24% to US$5,442.84 a tonne in Friday's session.

● ICE-monitored cocoa stocks reached a 2.5-year high of 3,688,949 bags by 29 October.

● Forecasters project global cocoa output falling 9.6% to 4.74 million tonnes.

● Third-quarter grindings rose 14.3%, led by Asia, while North America fell 2.5%.

Cocoa fell 0.24% to US$5,442.84 a tonne in Friday's session on 30 October, holding near its lowest levels since early October as Warehouse stocks climbed. The pause matters to chocolate makers such as Hershey (NYSE:HSY) and Mondelez (NASDAQ:MDLZ), which are among the largest buyers of cocoa.

The benchmark is ICE US cocoa in New York, priced in dollars per tonne. Cocoa is down 2.67% on the week, up 1.15% on the month, and 10.26% lower since the start of the year and 11.51% lower than a year ago. London cocoa, priced in sterling, is a separate benchmark.

A Full Warehouse Meets a Smaller Crop

Cocoa is caught between what is in the warehouse today and what forecasters expect from next season's crop. Stocks are at a multi-year high, which holds prices down. Production forecasts for 2026/27 point to a sharp fall, which could turn a surplus into a deficit.

What the Warehouses Show

The Volume of cocoa in ICE-monitored warehouses has grown through the year, reaching a 2.5-year high of 3,688,949 bags by 29 October. A sustained rise in stocks has pressured prices. Large inventories give chocolate makers more room to wait before buying and reduce the pull of near-term shortage fears.

Demand Is Recovering

Third-quarter grindings rose 14.3%, led by Asia, while North America fell 2.5%. Grindings are a widely watched proxy for chocolate Demand because they show how much cocoa processors are turning into butter, powder and liquor. A rise suggests that processors are using more beans, though stocks in warehouses are still climbing.

A Smaller 2026/27 Crop

In Ivory Coast, the world's largest cocoa producer, farmers reported below-average rainfall across most growing regions, but conditions remained adequate to support the current September-to-February main crop. The outlook for the broader 2026/27 season is less encouraging.

Forecasters project global production falling by 9.6% to 4.74 million tonnes, which could turn a 494,000-tonne surplus in 2025/26 into a 64,000-tonne deficit. Output is expected to contract across several major producers, including Ivory Coast, Ghana, Ecuador and Indonesia, amid weather disruptions associated with El Niño. A swing of that size from surplus to Deficit is why crop news can move the market so sharply.

What It Means for Chocolate Makers

Hershey is a US confectioner and a major buyer of cocoa. Higher cocoa costs squeeze margins unless the company can pass them on through price increases, change pack sizes or rely on hedges and forward purchases, which delay the effect of market moves. Lower cocoa prices would help input costs, but with a lag and potentially with pressure to cut shelf prices.

Mondelez owns Cadbury, Milka and other chocolate brands and is also a major cocoa buyer. Its exposure is diluted by a broad portfolio that includes biscuits and gum, and by currency effects because it sells in many countries. Like Hershey, it uses hedging and pricing actions, so the timing of any benefit from lower futures is uncertain.

Higher prices do not help every company. Chocolate makers face higher input costs, while farmers and exporters in West Africa are more directly exposed to the price they receive.

Cocoa Watch: Port Arrivals, ICE Stocks and Fourth-Quarter Grindings

Ahead of the main West African harvest, traders will follow weekly port arrivals from Ivory Coast, weather forecasts for the region and ICE certified stock reports. Fourth-quarter grind data arrives in January, and the International Cocoa Organization's quarterly bulletin gives updated Supply and demand estimates.

Prices could firm if rainfall is poor or disease spreads in West Africa, if arrivals fall or if grindings keep rising and draw down stocks. They could weaken if output rebounds, if inventories keep growing or if consumers cut chocolate purchases after retail price rises.