Cocoa Prices Plummet Amid Demand Concerns and Supply Outlook

Cocoa prices have sharply declined as demand concerns grow, fueled by Barry Callebaut AG's reduced sales guidance. Experts suggest that anticipated cocoa surpluses and depressed grindings in major markets could further influence stock prices in the cocoa sector.

Date: 11-04-2025

AI Rating: 4

Current Market Dynamics: The recent report highlights significant pressures on cocoa prices, primarily due to concerns about demand and the outlook for supplies. Cocoa prices closed down sharply, which could have negative ramifications for companies within the chocolate manufacturing sector.

Demand Concerns: Major firms like Barry Callebaut AG have cut their sales forecasts, indicating that high cocoa prices and potential tariff implications are crimping consumer demand. This sentiment aligns with previous warnings from executives at Hershey and Mondelez, who indicated that higher prices are hurting chocolate consumption.

Supply Surpluses: Furthermore, the International Cocoa Organization's projection of a global cocoa surplus for 2024/25 highlights the potential for continued downward pressure on cocoa prices. The anticipated surplus of 142,000 MT is notable, especially after a four-year shortfall. Such surpluses could also lead to falling cocoa prices, which would negatively impact revenue for chocolate manufacturers.

Production Levels: Reports indicate a possible decline in mid-crop harvest from the Ivory Coast. With lower production estimates contributing to a recovery in cocoa inventories, it is important to track how these fluctuations could manifest in earnings in upcoming quarters.

Grindings Data: Recent quarterly grinding reports showcasing decreased grindings in Europe, Asia, and North America signal diminishing demand, further complicating the outlook for industry players. If such trends persist, companies may see declines in earnings per share and net income, resulting in poor stock performance.

Stocks: HSY MDLZ