Cocoa Market Faces Supply-Demand Imbalance: Latest Barchart Analysis Shows Continued Price Pressure

Recent trading activity reflects mounting pressure on cocoa valuations, driven by a critical imbalance between abundant global supplies and deteriorating demand across the chocolate industry. According to leading commodity analysis from Barchart, the cocoa market remains under sustained downward pressure as structural headwinds intensify in both production and consumption dynamics.

On Friday, March ICE NY cocoa (CCH26) declined 12 points (-0.29%), while March ICE London cocoa (CAH26) fell 1 point (-0.03%). These moves extended the commodity’s month-long downward trajectory, with NY cocoa reaching a 2.25-year low and London cocoa posting a 2.5-year low on nearest-futures contracts. The extended weakness signals deeper market concerns beyond typical seasonal fluctuations.

Demand Crisis Deepens Across Global Chocolate Industry

The fundamental driver of price weakness stems from weakening consumption dynamics. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported a concerning 22% decline in sales volume within its cocoa division for the quarter ending November 30. The company specifically cited “negative market demand and a prioritization of volume toward higher-return segments,” highlighting how elevated chocolate prices have alienated consumers at retail.

Regional grinding reports paint an equally troubling picture for cocoa demand. The European Cocoa Association reported that Q4 European cocoa grindings contracted 8.3% year-over-year to 304,470 MT—significantly worse than expectations of a 2.9% decline and representing the weakest fourth-quarter performance in 12 years. Asian markets also showed softness, with the Cocoa Association of Asia reporting a 4.8% year-over-year decrease in Q4 cocoa grindings to 197,022 MT. North American demand remained essentially flat, with the National Confectioners Association noting only a 0.3% year-over-year increase in Q4 grindings to 103,117 MT.

Supply Surge Overshadows Limited Demand Recovery

The supply side presents an equally challenging outlook for price recovery. StoneX forecasted a global cocoa surplus of 287,000 metric tons for the 2025/26 season, followed by a 267,000 MT surplus in 2026/27. Meanwhile, the International Cocoa Organization reported that global cocoa stocks expanded 4.2% year-over-year to 1.1 million metric tons, adding to inventory pressure. These surplus projections stand in sharp contrast to the recent deficit conditions that characterized the market in prior years.

Inventory positioning at U.S. ports has shifted from supportive to bearish. After touching a 10.5-month low of 1,626,105 bags on December 26, ICE-monitored cocoa inventories rebounded to a 2.5-month high of 1,775,219 bags by Thursday, signaling renewed selling pressure and complicating the price recovery narrative.

West African Harvests Boost Supply Outlook Despite Producer Holdbacks

West African growing conditions remain favorable for near-term production expansion, though farmer sentiment remains complex. Tropical General Investments Group highlighted that favorable growing conditions in West Africa are supporting February-March cocoa harvests in both the Ivory Coast and Ghana, with farmers reporting larger and healthier pods relative to the prior-year period. Mondelez noted that the latest cocoa pod count in West Africa stands 7% above the five-year average and materially higher than last year’s crop.

The Ivory Coast, accounting for the world’s largest cocoa production share, has begun harvesting its main crop with farmer optimism regarding quality. However, despite favorable supply conditions, Ivory Coast farmers are exercising restraint in marketings due to depressed pricing. Cumulative export data through January 25, 2026 showed Ivory Coast cocoa shipments to ports reached 1.20 million metric tons for the current marketing year (October 1, 2025 through January 25, 2026), representing a 3.2% decline from the 1.24 MMT shipped in the equivalent prior-year period.

Offsetting Support from Secondary Producers

One constructive element for pricing comes from Nigeria, the world’s fifth-largest cocoa producer. Nigerian November cocoa exports fell 7% year-over-year to 35,203 MT, and Nigeria’s Cocoa Association projects that the country’s 2025/26 cocoa production will decline 11% year-over-year to 305,000 MT from the prior season’s projected 344,000 MT. This supply tightening from a secondary but significant producer provides some cushion against the broader supply expansion from West Africa’s larger producers.

Forward Outlook and Structural Considerations

The longer-term supply picture remains contested between competing forecasts. On November 28, the International Cocoa Organization cut its 2024/25 global surplus estimate to 49,000 MT from a prior estimate of 142,000 MT, while also reducing its global cocoa production forecast to 4.69 MMT from 4.84 MMT. Rabobank subsequently lowered its 2025/26 global cocoa surplus projection to 250,000 MT from an earlier November forecast of 328,000 MT. These revisions reflect the ongoing volatility in supply projections.

Barchart’s commodity analysis underscores that the cocoa market faces competing forces: near-term supply abundance and demand weakness continue to weigh heavily on price dynamics, while structural tightening from multiyear deficit conditions (including ICCO’s May 2024 revision noting a 494,000 MT deficit for 2023/24—the largest in over 60 years) provides some longer-term perspective. The December 2024 estimate of a 49,000 MT surplus for 2024/25 marked the first surplus in four years, signaling an inflection point in supply-demand balance that remains unsettled across regional markets.