Demand for cocoa, the key ingredient in chocolate, has fallen this year after major chocolate makers, like Hershey Co and Mars Chocolate North America raised prices last year following a surge in cocoa, milk and nut prices. Shoppers responded by buying less of the treat. "The only way this bear does not growl is if an El Nino drought takes over African production later this year," said Shawn Hackett, president of Hackett Financial Advisors in Florida.
The price of London cocoa futures are forecast to slide to 2,000 pounds per tonne at the end of 2015 and remain around there for most of 2016, according to the median estimate. This is down 8.1 percent from Wednesday's settlement at 2,177 pounds, but up 2.4 percent from the end of 2014.
New York cocoa futures were pegged at $3,000 a tonne, down 8.5 percent from Wednesday's close at $3,277 but up 3.1 percent from end-2014. They are pegged to average $2,875 in 2016. Several respondents said bean grinding - a barometer for chocolate consumption - will fall 2-5 percent this year, while processors struggle with poor margins. That would be the first global drop since in six year, according to ICCO data. The tough conditions will likely force chocolate makers to be more creative, by cutting product sizes through bite-size packaging to offset price hikes and curb raw material costs, one chocolate maker said.