Hershey seeking CFTC approval to buy more ICE cocoa than allowed, says report

Chocolate maker Hershey Co has requested permission from the Commodity Futures Trading Commission (CFTC) to buy an amount of cocoa from the stocks of ICE exchange that is much larger than the maximum allowed, a report said on Wednesday.

According to a report from Bloomberg News, Hershey wants to receive as much as 90,000 metric tons of cocoa from ICE certified stocks using futures contracts, which would equal 9,000 contracts. The current position limit set by CFTC is 4,900 contracts.

Hershey did not confirm or deny having made the request. The company said that it is "well covered" for its cocoa needs for 2025 in response to a Reuters request for comment. Hershey shares were falling 2.6% on late trading on Wednesday.

The CFTC, which is the top U.S. regulator for futures trading, declined to comment.

The Bloomberg report said lawyer Joshua Sterling from law firm Milbank LLP was working for Hershey regarding the request to the CFTC. Sterling, a former CFTC official, declined to comment.

A U.S. cocoa broker said that a potential clearance by the CFTC for that amount of buying would empty ICE certified cocoa stocks, considering both the volumes in ICE New York and the amount stored in London.

ICE New York stocks are currently at around 61,000 tons, while London stocks are close to 21,000 tons.

"It would take certs to zero and more than likely further dry out liquidity (in the futures market)," said the broker, adding that the potential move would be negative for other market participants.

A second broker, working for a New York firm, does not expect the trade to go ahead.

"I don't think the CFTC will grant them - or anyone - a 9,000 lots exemption," he said.