HERSHEY, Pennsylvania, August 18, 2026, 05:35 EDT — Cash trading remained shut in the U.S., while premarket activity continued.
- Meteorologists estimate the likelihood of a very strong El Niño at over 90%.
- WisdomTree reports that each major El Niño in the past 55 years led to a decline in cocoa production.
- Hershey’s adjusted gross margin rose by 350 basis points in the previous quarter.
The Hershey Company NYSE:HSY is confronted with new cocoa price pressures as El Niño intensifies. Shares declined 1.72% to $181.06 on Monday, then pointed 1.15% higher after hours.
The risk emerges as earnings rebound, supported in part by lower commodity costs. Hershey’s adjusted gross margin increased by 350 basis points in the previous quarter. A weather-related cocoa shortage could impede that progress when the company next secures coverage or purchases beans.
| El Niño cocoa indicator | Verified measure | Investor relevance |
|---|---|---|
| Very high chance of severe event | Over 90% | Heightens supply risk for 2026–27 |
| Strong events post-1971 | Each led to lower cocoa production | Historical pattern is consistent |
| Ivory Coast and Ghana contribution | Roughly half of world supply | Increases concentration of weather risk |
| Cocoa market in 2024 | Prices almost tripled | Highlights risk of higher costs |
| Cocoa price top in late-2024 | Surpassed $12,000 per metric ton | Outperformed several base metals |
WisdomTree, Inc. (NYSE:WT) reported that each significant El Niño event in the past 55 years has reduced cocoa production. West Africa may initially see surplus rainfall, followed by periods of heat and dry winds—conditions that affected the 2023–24 harvest.
“Everyone thinks El Niño is only associated with droughts in West Africa,” Best Weather consultant Jim Roemer said. “This is not necessarily true.” He pointed to heavy early rainfall as his main worry. Reuters
Hershey has made significant use of price increases. Last quarter, North America Confectionery saw approximately 14 percentage points in price realization. Volumes declined by nearly 10 points, resulting in a 4.2% rise in segment sales.
| Second-quarter metric | Outcome | Change from previous year |
|---|---|---|
| Net sales | $2.787 billion | +6.6% |
| Adjusted gross margin | 41.6% | +350 basis points |
| Adjusted operating margin | 20.2% | +450 basis points |
| Adjusted EPS | $1.90 | +57.0% |
| Confectionery price increase | Approx. 14 points | Not applicable |
| Confectionery volume | Decreased about 10 points | Not applicable |
The previous cocoa price surge was overcome by higher prices, but it also highlighted how responsive demand is. Chief Executive Kirk Tanner noted that U.S. consumers continued to focus on value and made selective choices, restricting the potential for a full price increase to be implemented again.
Management maintains its projection for 2026 net sales growth at 4.5% to 5.0%. Adjusted EPS is anticipated between $8.36 and $8.52. These forecasts are based on current cost visibility rather than any confirmed assessment of future El Niño effects.
| Food company | Monday move | Relative to Hershey |
|---|---|---|
| Hershey NYSE:HSY | -1.72% | Baseline |
| PepsiCo, Inc. NASDAQ:PEP | -1.81% | 0.09 point below |
| Mondelez International, Inc. NASDAQ:MDLZ | -2.25% | 0.53 point below |
| The J. M. Smucker Company NYSE:SJM | -2.93% | 1.21 points below |
On Monday, Hershey’s loss was less severe than its competitors. Trading volume reached 1.06 million shares, under the average of 1.68 million. The share price is still 24.4% under its 12-month peak of $239.48.
Hershey ended Monday with a market capitalization of $36.38 billion. The stock’s trailing price-to-earnings ratio stood at 24.73 and it offered a dividend yield of 3.21%.
| Analyst recommendation | Count | Share of 23 analysts |
|---|---|---|
| Strong buy | 6 | 26.1% |
| Buy | 2 | 8.7% |
| Hold | 14 | 60.9% |
| Sell | 0 | 0% |
| Strong sell | 1 | 4.3% |
The consensus analyst price target stands at $205.81, indicating potential gains of 13.7%. The outlook varies significantly, with the lowest estimate at $170 pointing to a 6.1% decline, and the highest forecast of $250 reflecting an upside of 38.1%.
Risks: El Niño outlooks are still based on probabilities. Hershey’s use of hedging, stockpiles, price adjustments and efficiency efforts might offset or postpone the impact of rising bean costs. Improved weather in West Africa could also bring down cocoa prices.
The investor benchmark is tight. Hershey clawed back 350 basis points in adjusted gross margin, relying on 14 points of pricing even as volume slipped by 10 points. A particularly intense El Niño would challenge the sustainability of that margin improvement.
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