Abundant Global Cocoa Supplies Intensify Price Pressures

The cocoa market has entered a challenging period as plentiful production collides with subdued consumption demand. March ICE NY cocoa closed down 12 points (-0.29%), while March ICE London cocoa fell 1 point (-0.03%) on a recent Friday, extending what has become a prolonged downward trajectory. NY cocoa futures reached a 2.25-year low, with London cocoa similarly posting a 2.5-year nearest-contract low, signaling sustained weakness stemming from abundant global supplies and tepid market participation.

Forecasters increasingly expect oversupply conditions to persist through coming seasons. StoneX projected a global cocoa surplus of 287,000 metric tons (MT) in 2025/26 and 267,000 MT in 2026/27, underscoring expectations that abundant inventory levels will constrain pricing. The International Cocoa Organization (ICCO) reinforced this outlook after reporting that global cocoa stocks expanded 4.2% year-over-year to 1.1 million MT, adding further downside pressure to an already-weakened market.

Global Surplus Widens Amid Weak Chocolate Demand

Consumers’ reluctance to purchase chocolate at elevated price points has become a primary headwind for cocoa valuations. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, disclosed a 22% plunge in sales volume within its cocoa division for the quarter ending November 30, directly attributing the contraction to “negative market demand and prioritization of volume toward higher-return segments within cocoa.” This sharp decline reflects how high chocolate prices have suppressed end-user purchasing activity.

Manufacturing activity data corroborate weakening demand across major cocoa-consuming regions. The European Cocoa Association reported Q4 European cocoa grindings contracted 8.3% year-over-year to 304,470 MT—substantially worse than expected declines of 2.9% and marking the weakest fourth quarter in 12 years. Asia experienced similar pressures, with the Cocoa Association of Asia disclosing Q4 Asian cocoa grindings fell 4.8% year-over-year to 197,022 MT. North American processors provided marginal relief, with the National Confectioners Association reporting Q4 North American cocoa grindings gained only 0.3% year-over-year to 103,117 MT, demonstrating the breadth of global demand softness.

Inventory Buildup and Strong West African Harvests Add to Supply Glut

Physical cocoa inventories held in US ports have reversed their prior compression, reinforcing the bearish supply picture. ICE-monitored cocoa inventories rebounded to a 2.5-month high of 1,775,219 bags by Thursday, substantially above the 1,626,105-bag low set on December 26. This inventory accumulation represents additional headwinds for prices attempting to stabilize.

West African production conditions present another factor pressuring prices downward. Favorable growing conditions across major cocoa regions are expected to support the February-March harvests in the Ivory Coast and Ghana, with producers reporting larger and healthier pods relative to prior-year comparisons. Mondelez noted that the latest West African cocoa pod count reached 7% above the five-year average and “materially higher” than the previous year’s crop, signaling robust harvesting potential ahead. The Ivory Coast is commencing its main crop harvest, with farmer sentiment pointing toward strong quality expectations.

However, one countervailing dynamic has emerged: West African producers have deliberately constrained shipments in response to depressed prices. Cumulative data through late January showed that Ivory Coast farmers shipped 1.20 MMT to ports during the current marketing year (October 1, 2025–January 25, 2026), representing a 3.2% decline from 1.24 MMT during the prior-year period. Nigeria, the world’s fifth-largest cocoa producer, is also contributing meaningfully less to global supply. Nigerian cocoa exports fell 7% year-over-year to 35,203 MT in November, with Nigeria’s Cocoa Association projecting 2025/26 cocoa production will decline 11% year-over-year to 305,000 MT from the prior season’s anticipated 344,000 MT. These supply restraints from major producers offer modest price support in an otherwise bearish environment.

Market Outlook Hinged on Production Adjustments

Longer-term perspectives suggest the cocoa market is transitioning from extreme deficit conditions toward more balanced supply-demand dynamics. ICCO significantly reduced its 2024/25 cocoa surplus estimate to 49,000 MT on December 19, marking the first surplus in four years after years of deficit-driven scarcity. This shift follows ICCO’s November 28 revision, which slashed the 2024/25 surplus forecast to 49,000 MT from a previous 142,000 MT projection and lowered global cocoa production estimates for 2024/25 to 4.69 MMT from 4.84 MMT. The contrast with prior-year conditions is stark: ICCO revised the 2023/24 deficit to a remarkable -494,000 MT, representing the largest deficit in over 60 years, with 2023/24 production having fallen 12.9% year-over-year to 4.368 MMT.

Current-season production has rebounded substantially: ICCO estimated 2024/25 global cocoa production rose 7.4% year-over-year to 4.69 MMT. Looking ahead, Rabobank reduced its 2025/26 global cocoa surplus projection to 250,000 MT from a November forecast of 328,000 MT, suggesting that while supply remains abundant by recent historical standards, the pace of surplus accumulation may be moderating.

The cocoa market currently reflects the interplay between abundant production capacity, weakened consumer demand, and mounting inventories—dynamics that will likely persist unless demand rebounds or producers implement further supply discipline.