1. just a short post. Not a buy and sell of HSY or MDLZ and certainly not cocoa.
2. Just a recap of what has happened: in Q1/Q2 of 2023, Hershey Management started mentioning elevated Cocoa prices. Hershey and Mondelez (maker of Cadbury's) share price started to fall from the highs of early 2023. Then cocoa started to rise by quickly, there was a dip towards 2nd half of 2024 before rising again. At the peak, cocoa futures were around 3x the october 2023 price. The reason for the cocoa rise was due to supply, weather, dieseas etc.
3. Hershey's hedged the cocoa price. And resorted to raising price with smaller packaging. Mondelez was more bullish, as they claimed that they chocolates, sold mainly in the EU were considered a weekly staple than discretionary unlike the USA, where chocolate tended to concentrate on the big 4 (Valetine, Easter, Halloween and Christmas). Then in the middle of 2025, MDLZ was surprised-pikachu that its chocolate demand was not so inelastic and the price-rises did impact consumers. Sometime in October, these two rivals collaborated on Oreos-Reese & Reese-Oreos.
4. Last week the largest buyer of chocolate for baking products (Barry Callebaut AG,) reported to nobody's surprise except the cocoa traders that supply outstripped demand and the cocoas prices has since continued to fall. It is now currently at October 2023 levels (depending on London Cocoa or USA cocoa prices).
5. My take: HSY has sort of recovered while MDLZ's price is recovering at a slower pace. Lower cocoa prices will mean better margins for HSY and MDLZ. I hope the cocoa prices will continue to swing lower towards early Q1/Q2 2023 prices.
6. HSY has a mstar fair price of $210 from the current $197. MDLZ has a Fair value of $73. I am not adding to any of them at these prices. I bought too early, in 2024 and 2025 and I am just collecting dividends.
hoot!