Cocoa: We drink it, give it as gifts and - most importantly - eat it. And in little over a month, our streets will fill with small, costumed humans begging for the stuff.

But lately, despite a drop in demand, cocoa has risen to levels not seen in months, with prices propped up by falling production worldwide. Especially as food giant Kraft (NYSE: KFT) preps for a second bid for U.K.-based Cadbury (NYSE: CBY), it's worth taking a second look at just how this commodity has performed lately:

CC, ICE [NYBOT] Daily, Dec. 2009

But that's just the short-term view; here's what the actual price of cocoa has averaged this year, according to the International Cocoa Organization (ICCO):

As you can see, cocoa futures have had quite a run, with prices increasing 20% just since July. We've had some volatility, but given the fundamentals, prices seem poised to continue upward.

Global Cocoa Production Down

Consider the supply coming from the world's top cocoa producers: Ivory Coast, Ghana, Indonesia, Nigeria and Cameroon. These five countries are responsible for roughly 70% of global cocoa production each year.

Ivory Coast, by far the largest producer, has had to contend with an overabundance of rain this year, which has allowed diseases such as black pod disease to afflict crops. As the country's harvest season comes to a close - picking occurs from April through September - estimates are that Côte d'Ivoire will produce only 1.1 million metric tons for crop year 2008-09, down 20% from the last year's harvest of 1.38 million metric tons.

Considering that previous 2008-09 forecasts as recently as July estimated the yield would fall between 1.29 million and 1.37 million metric tons, this latest estimate lends support to cocoa prices, to say the very least.

Next year may be more of the same, especially if nothing is done to improve Ivory Coast's aging plantations. In an Aug. 24 interview with Bloomberg, Ali Lakiss, the director of cocoa exporter SAF-Cacao, said:

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