Highlights

  • New York cocoa rose 3.2% to $4,893 a tonne on Wednesday afternoon, rebounding from Tuesday's four-month low of $4,764.
  • Ivory Coast's weather agency warned that El Niño could cut 2026-27 output by roughly a fifth to a quarter.
  • ICE-monitored cocoa inventories hit a two-and-a-half-year high of 3,751,670 bags, pointing to comfortable near-term global supply.
  • Hershey lifted its adjusted gross Margin to 42.7% from 31.8% and raised its 2026 Earnings outlook.

A weather bulletin has stopped cocoa's slide, at least for a day. New York cocoa rose 3.2% to $4,893 a tonne in afternoon trading on Wednesday 11 November, up from a four-month low of $4,764 the day before, after Ivory Coast's weather agency warned that a strong El Niño could cut the country's crop sharply. London cocoa gained 2.9% to £3,875. For Hershey (NYSE:HSY) and Mondelez (NASDAQ:MDLZ), the question is whether the rebound has legs.

The Weather Warning

The catalyst came from SODEXAM, the Ivorian state meteorological agency, which said 2026-27 output could fall by roughly a fifth to a quarter because of an exceptionally strong El Niño. It warned that annual rainfall could drop by 10% to 27%, with a shorter rainy season and a longer dry season. A water Deficit combined with high temperatures is already causing wilting and premature drop of young pods, it said.

Ivory Coast is the world's largest cocoa producer, harvesting more than 2 million tonnes last season, and in June it temporarily halted forward sales of its 2026-27 main crop after selling about 1.15 million tonnes.

Why Prices Had Been Falling

Wednesday's rise followed a sharp fall. Fund selling, weak chocolate Demand and rising exchange stocks had pushed both New York and London to four-month lows. ICE-monitored cocoa inventories reached a two-and-a-half-year high of 3,751,670 bags, and a broker said the build-up indicated Supply was outpacing demand, while noting that El Niño remains a risk. A large global surplus in 2025-26 is keeping near-term supplies ample.

The outlook for the next crop is darker. One projection has 2026-27 global output falling 9.6% to 4.74 million tonnes, which could turn the 2025-26 surplus into a deficit, and industry sources suggest the Ivorian mid-crop could be 42% to 50% smaller than a year earlier, at 300,000 to 350,000 tonnes. These are estimates that are likely to be revised as the season develops. Current supply looks comfortable while the 2026-27 crop outlook is worsening, and which matters more will depend on rainfall and how fast beans reach Ivorian ports.

What It Means for Chocolate Makers

For chocolate manufacturers, cocoa is a key input. A rising price can squeeze margins unless it is hedged or passed on to shoppers, while a falling price helps only with a delay, because large buyers typically buy forward and use hedges.

Hershey shows that lag at work. Third-quarter net sales rose 3.0% to $3.28 billion, with prices up about 11 points and volumes down about 10 points. Adjusted gross margin rose to 42.7% from 31.8% a year earlier on lower net Commodity costs, and the company raised its 2026 adjusted Earnings Per Share outlook to $8.58 to $8.74. A sustained cocoa rebound could, over time, erode that cost advantage as hedges roll over, though Hershey has not given guidance on that.

Mondelez is more diversified, with large biscuit and snack businesses alongside chocolate. Its third-quarter net Revenue rose 2.3%, mainly on volume, and Operating Income rose by more than $1 billion despite cocoa volatility. It reaffirmed guidance for at least 2% organic revenue growth and flat to 5% constant-currency adjusted earnings per share growth, and its broader portfolio means a cocoa move touches group margin less than Hershey's.

What Could Move Prices From Here

Cocoa could firm further if dry Harmattan winds and a long dry season hit flowering in Ivory Coast and Ghana, if port arrivals stay well below last year, or if funds cover short positions. Prices could weaken if rains return, exchange inventories keep rising or grind data show soft demand. These are conditional scenarios, not forecasts, and crop-loss estimates depend on how strong El Niño actually turns out.

Watch weekly Ivory Coast port arrivals, daily ICE certified stocks, Friday's CFTC report and further SODEXAM bulletins.