Abundant Global Cocoa Supplies Overwhelm Markets, Pushing Prices to Two-Year Lows

Cocoa futures delivered a bearish performance this week, with March contracts in both New York and London closing lower as the commodity extended its month-long downtrend. Prices have now reached their lowest levels in over two years, a striking reversal from the supply-constrained environment that dominated cocoa markets in recent seasons. The driving force behind this sharp repricing is a dramatic shift in market fundamentals: abundant global cocoa reserves have collided with a collapse in consumer demand for chocolate and cocoa products.

The disconnect between supply and appetite has reached critical levels. Forecasters expect the cocoa market to swing into significant surplus territory, with projections for both 2025/26 and 2026/27 pointing to massive inventory overhangs. Global cocoa stocks have simultaneously climbed at a year-over-year pace, compounding downward pressure on valuations. This represents a stark turnaround from just months earlier, when tight supply conditions had supported prices.

The Demand Crisis: Why Consumers Are Turning Away From Chocolate

Consumer behavior has fundamentally shifted in response to elevated chocolate prices. Major chocolate manufacturers are experiencing sharp declines in sales volume as customers balk at premium pricing. Industry reports document substantial pullbacks in cocoa grinding activity across all major consuming regions—a bellwether indicator for actual cocoa usage and demand trends.

European grinding data has been particularly weak. Processing facilities dramatically reduced cocoa throughput in recent months, with activity falling to levels not seen in over a decade. This marked deterioration exceeded analyst expectations and signals that chocolate makers and confectioneries are genuinely struggling with demand. Asian grinding reports tell a similar story, with processors also scaling back activity. Even North America, typically a steadier market, showed minimal growth in cocoa processing, indicating that weakness is not isolated to any single region but reflects a broad global consumption malaise.

Chocolate makers have been candid about the challenges. Industry leaders cite “negative market demand” and a shift toward higher-margin product categories as reasons for retrenching on cocoa volume. The message is clear: at current price levels, many consumers are simply opting out of the market.

Abundant Inventory Builds Adding Fresh Weight to Prices

The combination of ample cocoa production and reduced consumer usage has created inventory bloat, particularly in key distribution hubs. Cocoa stockpiles held at major US ports have rebounded substantially from recent lows, climbing to their highest levels in over two months. This inventory accumulation is typically viewed as a bearish factor for prices, as ample supplies available for immediate use reduce incentives for consumers to front-load purchases or pay premium prices.

The speed of the inventory recovery underscores the severity of the supply-demand imbalance. Warehouses that were relatively lean just weeks earlier are now absorbing growing cocoa flows, keeping pressure on market prices.

West African Harvests Point to Further Supply Growth

Favorable growing conditions across West Africa’s principal cocoa regions are expected to bolster the current harvest season. Farmers report healthier pods and larger crops compared with the same period last year, and chocolate makers monitoring field conditions have documented pod counts running significantly above historical averages. The Ivory Coast, the world’s dominant cocoa producer, has begun harvesting its main crop, and farmer sentiment remains constructive.

While some West African producers are deliberately slowing their shipments to ports due to depressed prices—attempting to wait for better markets—this restraint is modest and unlikely to fundamentally alter the abundant supply trajectory. Nigeria, the world’s fifth-largest cocoa producer, is expected to deliver substantially lower production in the coming season, which provides only limited offset to the global surplus situation.

Market Outlook: Limited Support From Tightening Factors

The downside pressure on cocoa prices appears likely to persist in the near term given the structural mismatch between abundant global supply availability and weakening demand. While some forecasters have revised down their surplus estimates modestly from earlier projections, the surplus remains substantial enough to keep prices under pressure. Industry organizations have also trimmed their global production estimates, but the reductions are not severe enough to eliminate the overhang.

The transition from deficit to surplus—achieved after several years of tight markets—has fundamentally reset market psychology. With abundant cocoa now available globally, consumers and processors have lost the urgency to purchase at elevated prices, creating a self-reinforcing cycle of pressure on valuations. Until either demand revives significantly or producers cut production more aggressively, cocoa markets seem likely to remain challenged by the abundant supply situation dominating global commerce.