Global Cocoa Prices Tumble as Market Grapples with Supply Glut and Demand Crunch

Cocoa prices have entered a steep downturn, with futures contracts across major exchanges posting significant declines in recent trading sessions. ICE New York cocoa (CCH26) dropped 3.69% while London cocoa (CAH26) fell 4.71%, marking the seventh consecutive week of losses. New York cocoa has reached its lowest level in over two years, while London prices hit a 2.5-year low. This extended selloff reflects a confluence of structural challenges: abundant global supplies colliding with tepid buyer interest.

A Downtrend Deepening: What Futures Markets Are Signaling About Cocoa Prices

The sharp retreat in cocoa prices is not a temporary fluctuation but rather the manifestation of deeper market imbalances. Both hemispheric exchanges—New York and London—are signaling weakness, with inventories building across trading hubs. ICE cocoa stocks have climbed to a 3.75-month high of 1,871,034 bags, amplifying selling pressure. The consistency of these declines across multiple sessions and venues suggests that cocoa prices are re-evaluating to a lower equilibrium that reflects the current reality of excess supply meeting diminished consumption.

Oversupply Takes Center Stage: Why Cocoa Prices Face Persistent Pressure

The primary culprit behind collapsing cocoa prices is a glaring supply surplus. StoneX’s analysis projects that the global cocoa market will experience a surplus of 287,000 metric tons in the 2025/26 season, with an even larger 267,000 metric ton surplus anticipated for 2026/27. This structural excess is not a recent phenomenon—the International Cocoa Organization (ICCO) documented that worldwide cocoa inventories surged 4.2% year-over-year, reaching 1.1 million metric tons. When supply overwhelmingly exceeds demand, cocoa prices inevitably face downward momentum.

The scale of projected surpluses underscores why relief in cocoa prices appears unlikely in the near term. Previous forecasts have consistently underestimated supply availability, and current projections suggest the imbalance will persist and potentially worsen.

Weak Global Demand Compounds Cocoa Price Decline

On the demand side, the picture is equally grim for price support. Consumer reluctance to purchase chocolate—driven by elevated prices—has created a vicious cycle that further pressures cocoa prices downward. Barry Callebaut, the world’s largest cocoa and chocolate processor, reported a devastating 22% drop in cocoa division sales volume for the quarter ending November 30, citing weak market demand and a strategic pivot toward higher-margin products.

The weakness extends across all major consuming regions. European cocoa grindings—a key demand indicator—contracted 8.3% year-over-year in Q4 to 304,470 metric tons, substantially worse than the anticipated 2.9% decline and the lowest quarterly figure in 12 years. Asian grindings likewise declined 4.8% year-over-year to 197,022 metric tons. Only North America showed modest resilience with a marginal 0.3% increase to 103,117 metric tons. This global pullback in processing directly translates to reduced cocoa demand, a headwind that keeps cocoa prices under siege.

Production Surge and Export Dynamics: Adding Fuel to the Fire

On the supply side, producers are ramping up exports. Nigeria, the world’s fifth-largest cocoa producer, shipped 54,799 metric tons in December—a 17% year-over-year surge. This increased supply flow into the market provides a continuous source of downward pressure on cocoa prices. Conversely, slower shipments from Ivory Coast, the largest global producer, offer limited relief; farmers delivered 1.27 million metric tons from October through early February, representing a 3.8% decrease from the prior year period.

However, this Ivory Coast slowdown pales in comparison to the overwhelming increases from other origins and the structural surplus backdrop.

Climate Conditions and the Long-Term Threat to Cocoa Price Recovery

Adding to the bearish outlook for cocoa prices is the confluence of favorable growing conditions across West Africa. Tropical General Investments Group noted that optimal weather is expected to boost February-March harvests in both Ivory Coast and Ghana, with farmers reporting larger and healthier pods than the previous year. Mondelez data corroborates this optimism: the latest cocoa pod count in West Africa stands 7% above the five-year average and substantially exceeds last year’s levels.

These benign conditions suggest that production capacity will only expand further, a development that bodes poorly for any meaningful recovery in cocoa prices. The Cocoa Association of Nigeria projects that Nigeria’s output will actually decline 11% year-over-year to 305,000 metric tons in 2025/26, but this localized contraction is dwarfed by global abundance and anticipated increases elsewhere.

Market Balance and Forward Expectations: A Dimmer Outlook

Looking at longer-term forecasts, cocoa prices face headwinds from revised surplus projections. The ICCO lowered its 2024/25 global surplus estimate to 49,000 metric tons from the earlier 142,000 metric ton forecast, reflecting some supply tightening from prior expectations. Rabobank similarly revised its 2025/26 surplus projection downward to 250,000 metric tons from 328,000 metric tons previously. While these revisions suggest incremental tightening compared to earlier forecasts, they still imply significant excess supply, which will continue to weigh on cocoa prices.

Historically, the market had contended with acute scarcity; the 2023/24 season posted a deficit of 494,000 metric tons—the largest shortfall in over 60 years—which had bolstered prices during that period. The ICCO reported that 2023/24 production reached only 4.368 million metric tons due to a 12.9% year-over-year contraction. The subsequent rebound in production for 2024/25—rising 7.4% year-over-year to 4.69 million metric tons—has fundamentally shifted the supply-demand calculus. The transition from scarcity to surfeit represents a structural pivot that explains the dramatic erosion in cocoa prices.

For investors and industry participants, the confluence of oversupply, depressed demand, and favorable production conditions suggests that cocoa prices will struggle to find a durable bottom without a material reduction in global supply or a significant resurgence in consumption.