Over the past few years, cocoa prices have surged from long‑standing normal ranges of ~USD$2,000–$3,000 per metric ton to peaks exceeding USD$10,000–$12,000/ton in late 2024 and early 2025; a more than 3–4× increase in a short span. This exceptional rally was driven primarily by severe supply shocks tied to abnormal weather and climate stress (notably El Niño‑driven droughts, erratic rainfall, and heightened disease pressure) in the two dominant producing nations, Côte d’Ivoire and Ghana, which together supply 60–70% of global cocoa. Compounding the squeeze, many cocoa farms were already aging and under-invested, with constrained ability to absorb shocks. At the same time, speculative demand, tight inventory buffers, and relatively favorable U.S. dollar dynamics (a weaker USD made commodities more attractive) helped fuel the upward momentum.
Since the peak, prices have begun to retreat, reaching around $8,000 per ton by mid-2025 and later falling toward $6,000 per ton, reflecting both an easing of speculative excess and more optimistic supply forecasts. The weakening of El Niño and the possibility of a shift toward neutral or even La Niña conditions offers some hope for stabilization, especially in cocoa’s West African heartland. Still, the damage done to farms and yield potential is not reversed overnight. The challenge ahead lies not only in better weather but in restoring farm resilience, managing demand pressures, and navigating currency and macro volatility. Cocoa, having proved highly sensitive to climate stress, may now rest on a new “higher floor” of pricing even in milder seasons, as several firms have begun to suggest.
When talk of a higher floor is floated, the SIA point and figure chart comes out immediately to assess where this floor might manifest. Technically, aside from visible trend-level support around $5,200 per ton, there is little to suggest a firm base near current levels. In the attached chart, let’s assume the current price range holds. That would imply a tentative floor for cocoa around $5,800–$6,100. However, this assumption is not backed by any decisive turn in price action, and sellers still appear firmly in control of the supply/demand relationship. In that light, deeper support levels must be considered.
It might be more accurate to say that the lofty valuations from 2023–2025 now act as an overhead zone of resistance, with levels at $6,869, $7,430, and $8,692 showing up on the point and figure charts as technical barriers that will need to be cleared before any retest of $12,000 can be credibly discussed. That could also be window-paned by the pattern of lower point and figure tops at $12K, $11K, $10K, $9.5K, and $8.5K. From a point and figure perspective, true support only appears at $3,667 and $3,391; both still roughly 50% below current prices. That lower floor would be consistent with decades of historical price interaction, where a well-defined value zone between $1,800/ton and $3,500 has been firmly established. Meanwhile, the cocoa continuous contract hosts a SIA SMAX reading of 0 out of a perfect score of 10, further highlighting the lack of relative strength against a basket of alternate asset classes.
The Hershey Company, as one of the world’s largest chocolate manufacturers, has been significantly affected by the unprecedented rise in cocoa prices over the past few years. These soaring input costs have directly pressured Hershey’s profitability, leading the company to implement a range of strategies to manage the impact. While Hershey has effectively utilized hedging, productivity improvements, and supply chain efficiencies to buffer some of the cost increases, it has become clear that these measures cannot fully absorb the magnitude of the price surge.
Consequently, Hershey has had to introduce measured price increases across its confectionery portfolio and make adjustments to packaging and product offerings to help offset higher cocoa expenses. The company acknowledges that while cocoa prices may moderate from their recent peaks, the cost environment remains elevated compared to historical levels. This reality has forced Hershey to balance protecting its profit margins with maintaining consumer demand in a challenging market environment. Overall, the sustained high cost of cocoa presents a strategic challenge that Hershey continues to navigate through a combination of financial risk management and operational agility.
This strategic management may be starting to pay off, as prices of Hershey’s primary input, cocoa, begin to correct toward more normalized levels. Given the company's inverse exposure to cocoa as a commodity input, falling prices are inherently margin accretive. At the same time, HSY shares appear to be breaking out of a multi year price discovery triangle (see black lines). The SIA SMAX score shows a constructive reading of 7 out of 10, potentially indicating improving technical momentum. That said, the stock still lags in relative strength compared to higher octane areas of the market such as technology, aerospace, and metals and mining. These sectors have dominated recent performance while low volatility names like Hershey have taken a back seat. HSY shares are up 14.48% year to date, which, measured against the S&P 500’s YTD return of 13.14%, is in line at best. Still, this may be a company to watch, especially if continued market volatility renews interest in defensives and safe harbor equity profiles.
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