West African Cocoa Harvest Outlook Triggers Sharp Price Retreat

Cocoa futures took a beating on Friday, with March ICE NY cocoa sinking 194 points to close -3.20% lower, while March ICE London cocoa fell 129 points, finishing down -2.95%. The contract touched a one-week low before settling well into the red, as improving agricultural conditions across West Africa overshadowed other market supports.

Bumper Crop Prospects Pressure Cocoa Price Momentum

The primary headwind for cocoa futures stems from strengthening crop conditions in leading producing regions. Tropical General Investments Group highlighted Friday that better weather patterns are expected to deliver a robust February-March harvest across Ivory Coast and Ghana, with farmers reporting noticeably larger and more robust pods compared to the year-ago period.

Mondelez, a major chocolate processor, reinforced this outlook by noting that the current cocoa pod count in West Africa sits 7% above the five-year benchmark and substantially exceeds last year’s figures. With harvests underway in Ivory Coast, the region’s farming community is exhibiting optimism regarding crop quality, further suggesting ample supplies ahead.

Weekly Volatility: Rally Reversed as Prices Succumb to Supply Recovery

Just three days prior, cocoa futures had surged to three-week highs on Monday as port delivery data sparked tightness concerns. During the week ended December 28, Ivory Coast farmers delivered only 59,708 MT to ports—a 27% decline versus the same week last year. Year-to-date shipments through December 28 totaled 1.029 MMT, down 2.0% from 1.050 MMT in the prior year.

The subsequent Friday decline suggests the market has now digested those supply concerns in light of the more favorable harvest landscape ahead.

Structural Support Still In Play Despite Friday Weakness

Despite the bearish price action, cocoa retains meaningful support from multiple sources. New listing momentum from cocoa futures inclusion in the Bloomberg Commodity Index (BCOM) beginning January is expected to draw approximately $2 billion in index-related buying interest, according to Citigroup analysis.

Additionally, ICE-monitored cocoa stocks at US ports hit a 9.5-month low of 1,626,105 bags last Friday, suggesting tight warehouse availability that could eventually limit downside moves. Global supply forecasts have also shifted tighter: the International Cocoa Organization (ICCO) slashed its 2024/25 surplus estimate to 49,000 MT from 142,000 MT previously, while cutting global production guidance to 4.69 MMT from 4.84 MMT. Rabobank similarly trimmed its 2025/26 surplus projection to 250,000 MT from an earlier 328,000 MT estimate.

Offsetting Headwinds: EU Deforestation Law Delay and Weak Demand

The European Parliament’s November 26 decision to delay its deforestation regulation (EUDR) by one year removes a near-term supply constraint, allowing continued imports from deforestation-affected regions in Africa and Indonesia. This regulatory reprieve effectively keeps supply channels open and pressure on cocoa price.

Demand weakness also clouds the near-term picture. Asian cocoa grindings in Q3 tumbled 17% year-over-year to 183,413 MT—the lowest third-quarter total in nine years. European cocoa grindings fell 4.8% to 337,353 MT, marking the weakest Q3 in a decade. North American grindings rose 3.2%, though reporting methodology changes skewed that data.

One Bright Spot: Nigerian Production Headwinds

Nigeria, ranked as the world’s fifth-largest cocoa producer, provides a contrarian bullish factor. The nation’s Cocoa Association projects 2025/26 production will contract 11% to 305,000 MT from an expected 344,000 MT in the current year. September cocoa exports remained flat year-over-year at 14,511 MT, underscoring the region’s production challenges.

The cocoa market remains caught between near-term harvest abundance and structural supply tightness, leaving price direction dependent on which narrative gains dominance in coming weeks.