Cocoa Price Momentum Builds as Ivory Coast Deliveries Ease and Traders Cover Shorts

Cocoa futures staged a notable comeback in Tuesday’s session, with March ICE NY cocoa climbing 90 points to close +2.14% and London cocoa #7 jumping 91 points for a +3.04% gain. The market’s second consecutive rally reflects a sharp reversal in sentiment, driven primarily by declining shipments from the world’s largest cocoa-producing nation and a wave of short-covering activity among market participants. This reversal marks a significant shift after the sector had hit multi-year lows just days earlier, signaling that cocoa price dynamics are shifting amid mixed signals from both the supply and demand sides.

Ivory Coast Shipments Decline, Triggering Buying Interest

The catalyst for the cocoa price rebound centers on slowing cocoa deliveries flowing into Ivorian ports. According to Monday’s cumulative data spanning the current marketing year from October 1, 2025, through February 1, 2026, the Ivory Coast shipped 1.23 MMT of cocoa—representing a concerning 4.7% decline compared to 1.24 MMT in the equivalent period last year. As the dominant global cocoa producer, any shift in Ivorian export flows carries significant weight in cocoa price determination. The moderation in these shipments appears to have triggered short-covering activity, as traders who had positioned bearishly reconsidered their outlook and rushed to buy back positions, providing immediate upward pressure on cocoa prices.

Persistent Demand Weakness Shadows the Market

Despite the price bounce, fundamental headwinds remain formidable. Last Friday’s session had pushed New York cocoa to a 2.25-year low, while London cocoa sank to a 2.5-year nadir, reflecting structural imbalances between abundant global supplies and persistently weak consumption. The demand picture has deteriorated sharply, particularly among major chocolate manufacturers and processors. Barry Callebaut AG, the world’s leading producer of bulk chocolate, disclosed a startling 22% plunge in sales volume within its cocoa division during the quarter ending November 30, attributing the weakness to depressed market demand and a strategic shift toward higher-margin business segments.

Grinding data—a key indicator of downstream cocoa utilization—confirms the demand malaise. The European Cocoa Association reported that Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 MT, marking not just a larger decline than the anticipated 2.9% contraction but also the weakest fourth-quarter performance in 12 years. Asian processors fared somewhat better but still contracted, with Q4 grindings down 4.8% year-over-year to 197,022 MT according to the Cocoa Association of Asia. North American grindings provided minimal relief, rising just 0.3% year-over-year to 103,117 MT. These grinding figures underscore that consumers remain reluctant to support elevated cocoa prices, creating a structural ceiling on the market.

Supply Dynamics Present Mixed Picture

The supply equation presents a nuanced backdrop. Global cocoa inventories held at U.S. ports have trended upward, representing headwinds for cocoa prices. After plunging to a 10.5-month low of 1,626,105 bags on December 26, ICE-monitored stockpiles rebounded smartly to 1,782,921 bags by Tuesday—a 2.5-month high that generally dampens bullish sentiment. This inventory recovery suggests adequate supply buffers remain available despite recent export slowdowns.

Broader supply forecasts have shifted considerably. StoneX projected a global cocoa surplus of 287,000 MT for the 2025/26 season and a 267,000 MT surplus for 2026/27, indicating supply remains structurally long. The International Cocoa Organization (ICCO) reported on January 23 that global cocoa stocks accumulated to 1.1 MMT, up 4.2% year-over-year, providing further evidence that supplies are not acutely constrained at the global level.

West African Harvest Outlook Supports Supply Confidence

Favorable growing conditions across West Africa are expected to support healthy cocoa yields during the critical February-March harvest window in both the Ivory Coast and Ghana. Tropical General Investments Group highlighted that current conditions are fostering larger, more robust cocoa pods relative to the prior-year comparison. Mondelez observed that the latest pod count in West Africa stands 7% above the five-year average and materially exceeds last year’s crop, signaling farmers’ optimism about forthcoming harvest quality and volume. The Ivory Coast’s main crop harvest has already commenced, with growers expressing confidence in output potential.

Offsetting this West African strength is a meaningful contraction in cocoa production from Nigeria, the world’s fifth-largest producer. Nigeria’s November cocoa exports declined 7% year-over-year to 35,203 MT, and the Nigerian Cocoa Association projects that 2025/26 production will contract 11% year-over-year to 305,000 MT from the prior year’s projected 344,000 MT. This supply tightening from Nigeria provides some constructive underpinning for cocoa prices.

Longer-Term Supply Tightening Could Support Cocoa Price Recovery

While near-term supply concerns remain modest, the longer-term outlook has tightened materially. The ICCO significantly revised its 2024/25 cocoa surplus estimate downward to just 49,000 MT on December 19—marking the first year of balance after four consecutive years of deficits. Global production in 2024/25 rose 7.4% year-over-year to 4.69 MMT, but inventory drawdowns during the massive 2023/24 deficit period (which reached -494,000 MT, the largest in over 60 years) have reduced the global cocoa buffer. Rabobank reinforced this tightening narrative last week, slashing its 2025/26 global cocoa surplus projection to 250,000 MT from its prior November forecast of 328,000 MT, indicating that supply recovery will not be as abundant as previously anticipated. These revisions suggest that while cocoa prices face near-term demand headwinds, the structural supply picture could ultimately provide support to cocoa price recovery as 2025 progresses.