Valentine's Day has arrived, and near-record high cocoa prices mean consumers can expect to pay significantly more this year for a box of chocolates at the supermarket than last year. The price surge has been mainly driven by tightening global supplies, with cocoa inventories in New York and London sliding to new record lows. 

Cocoa inventories at Intercontinental Exchange's London warehouses sank to 21,000 tons this week, down from 100,000 tons one year ago.

"That is absolutely tiny, the tiniest we've ever seen," said Jonathan Parkman, co-head of agriculture at commodity broker Marex, quoted by Financial Times. 

Parkman warned: "There is no slack in the system - that's what it tells you. We're very, very tight."

He pointed to warehouses in New York as more evidence that the supply crisis is widespread across Western markets. He noted that stocks in NYC warehouses are around 90,000 tons, adding, "That is incredibly low for this time of the season."

Sliding global stocks are a byproduct of adverse weather conditions in West Africa, crushing cocoa production, along with elevated demand worldwide, have been some of the reasons that cocoa prices in New York have tripled since the start of 2023. 

"People have been letting their futures expire so that they would get physical cocoa. And I don't think there's any incentive for traders to supply cocoa to those warehouses right now," an executive at a major chocolate maker told FT, who did not want to be named. 

Last month, Bloomberg reported that Hershey was trying to gain approval from the Commodity Futures Trading Commission to purchase a massive amount of cocoa through the New York exchange. 

Panic Hedge? Hershey Reportedly Asks CFTC Approval To Buy Huge Cocoa Pile On NY Exchange https://t.co/F2dTAh0aQ4

— zerohedge (@zerohedge) January 9, 2025

Shortly after Bloomberg's report, Goldman's Natasha de la Grense told clients: "The headlines on Hershey today suggest the outlook for confectionary (cocoa) cost inflation is getting even more extreme." 

In mid-December, Goldman's commodity derivatives analyst Hugo Fuentes told clients to "go long cocoa" as "prices are positioned for significant upside driven by structural supply deficits, under-hedged consumers, and historically low warehouse stocks." 

Last week, Hershey CEO Michele Buck provided encouraging news. During an earnings call, Buck told investors that signs of potential demand destruction have emerged.