Stock Markets June 2, 2026 04:33 AM

Barry Callebaut Sees Cocoa Prices Remaining Tepid, Points to Fuel as Key Cost Headwind

CEO says volume outlook incorporates El Nino; Middle East demand softness has limited group effect, but higher fuel costs are chief concern into FY2027

By Avery Klein

Barry Callebaut's chief executive told reporters on a Tuesday call that the company's volume forecasts for the coming year already account for El Nino conditions. Management does not expect cocoa prices to climb back to the highs seen over the past two years. While demand in parts of the Middle East has eased recently, the CEO said this had not materially altered overall performance; activity in the UAE is improving but remains beneath earlier levels. The executive singled out rising fuel costs as the principal impact from Middle East developments and identified fuel-related expenses as the firm's main cost worry looking toward fiscal 2027.

Barry Callebaut Sees Cocoa Prices Remaining Tepid, Points to Fuel as Key Cost Headwind

Key Points

  • Barry Callebaut's volume forecasts for the coming year incorporate expectations for El Nino weather.
  • Management does not anticipate cocoa prices returning to the high levels seen over the past two years.
  • Recent softness in Middle East demand has not materially affected overall group performance; UAE activity is recovering but remains below previous levels.
  • Rising fuel costs are identified as the principal impact from the Middle East and the main cost worry looking into fiscal 2027.

Barry Callebaut AG's chief executive outlined the company's near-term outlook during a media call on Tuesday, saying the firm's volume projections for the upcoming year take into account anticipated El Nino weather patterns.

The CEO said management does not expect cocoa prices to return to the elevated levels observed in recent years, noting that cocoa markets underwent substantial price increases over the past two years.

Turning to demand dynamics in the Middle East, the executive reported a pullback in recent weeks but stressed that the softness had not had a material effect on the group's overall results. He added that activity in the United Arab Emirates is showing signs of recovery, though it remains below earlier levels.

Asked about the principal implications of the Middle East developments, the CEO emphasized the impact on fuel costs, stating, "the main impact from the Middle East without a single doubt is the fuel impact." He explained that higher fuel prices have a direct effect on Barry Callebaut's operations and a secondary, indirect effect on consumer demand.

Looking further ahead, management flagged fuel-related expenses as the company's main cost concern for fiscal year 2027. The executive described these fuel costs as the primary item that could influence overall cost levels for the business during that period.

The comments left the company signaling a relatively stable cocoa price outlook while drawing attention to energy-cost volatility as the main operational risk tied to recent regional market shifts.


Context that the company conveyed

  • Volume guidance includes an assumption for El Nino weather patterns.
  • Company does not foresee cocoa prices rising back to the recent peaks that followed substantial increases over the last two years.
  • Short-term demand in parts of the Middle East has weakened but so far has not materially changed group performance; UAE activity is improving but has not yet reached prior levels.
  • Fuel costs are the chief concern stemming from the Middle East situation and represent the main cost worry heading into fiscal 2027.

Risks

  • Higher fuel prices - impacts operations directly and could dampen consumer demand, affecting the food manufacturing sector and commodity-linked margins.
  • Persistent weakness in Middle East demand - while not yet material to group performance, prolonged softness could influence regional sales and distribution in the confectionery market.
  • Weather-related volatility - El Nino is already factored into volumes, but actual weather outcomes could still alter supply or operational dynamics for cocoa-dependent producers.

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