London Cocoa Price Under Pressure as Oversupply Crushes Market Demand

The London cocoa price has joined a broader market retreat, with ICE London cocoa futures sliding -45 points (-1.72%) on Friday to mark a 2.5-year low. The decline extends a six-week downward trajectory that has left New York cocoa contracts at 2.25-year lows, reflecting a fundamental shift in market dynamics where excessive global supplies are overwhelming lackluster consumer appetite for chocolate products.

Demand Collapse Takes Center Stage in Price Deterioration

The erosion of purchasing demand has emerged as a primary headwind for cocoa valuations. Barry Callebaut AG, which dominates the bulk chocolate manufacturing sector globally, disclosed a sharp -22% contraction in sales volume within its cocoa division for the November-end quarter. The company attributed this weakness to “negative market demand and a prioritization of volume toward higher-return segments within cocoa,” signaling that elevated cocoa prices have triggered widespread buyer resistance.

Industry grinding data reinforces this demand weakness across all major regions. European cocoa grinding activity fell -8.3% year-over-year in Q4 to 304,470 MT—a performance that undercut analyst expectations of a -2.9% decline and marked the weakest quarterly result in a dozen years. Similarly, Asian grindings contracted -4.8% year-over-year to 197,022 MT during the same period. North American grindings proved marginally more resilient, rising just +0.3% year-over-year to 103,117 MT, yet still revealing muted commercial interest in chocolate products.

Mounting Global Surplus Exerts Downward Pressure

The supply picture has deteriorated significantly, compounding the demand crisis. StoneX forecasted a global cocoa surplus of 287,000 MT in the 2025/26 season, with an additional 267,000 MT surplus projected for 2026/27—volumes that far exceed anything the market can readily absorb. The International Cocoa Organization (ICCO) reported that global cocoa stocks increased 4.2% year-over-year to 1.1 million MT, contributing to the inventory burden weighing on prices.

The situation in warehouses monitored by ICE exchanges has become particularly acute. Cocoa inventories rose to a 4.25-month high of 1.94 million bags on Friday, reflecting the inability of the market to clear excess supply. Rabobank recently cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a previous November forecast of 328,000 MT—an adjustment that still leaves the market drowning in oversupply.

Regional Export Dynamics Create Mixed Signals

Export activity from major producing regions tells a complex story. Nigeria, the world’s fifth-largest cocoa producer, boosted December exports by +17% year-over-year to 54,799 MT, adding to the downward pressure on the London cocoa price and broader market sentiment. This increased export activity reflects the reality that producers are attempting to move cocoa inventory before prices erode further.

In contrast, Ivory Coast cocoa shipments to ports have slowed, offering a modest counterweight to global oversupply concerns. During the current marketing year through February 8, 2026, Ivory Coast farmers shipped 1.27 million MT to ports—representing a -3.8% decline versus 1.32 million MT in the prior-year period. As the world’s largest cocoa producer, any disruption in Ivory Coast logistics provides limited support, though cumulative shipment slowdowns could tighten near-term availability.

Favorable West African Growing Conditions Amplify Long-Term Supply Risk

Tropical weather patterns in West Africa present a bearish outlook for cocoa prices in the medium term. Favorable growing conditions are expected to support robust February-March harvests across the Ivory Coast and Ghana, with farmers reporting larger and healthier pods compared with the prior year. Mondelez disclosed that the latest cocoa pod count in West Africa stands 7% above the five-year average and is “materially higher” than last year’s crop, signaling that the 2025/26 harvest season will likely deliver substantial volumes to market.

Ivory Coast farmers have begun harvesting the main crop and express optimism regarding pod quality, reinforcing expectations for healthy production volumes ahead. These favorable agro-climatic conditions represent a structural headwind for the London cocoa price, as the near-term supply picture faces augmentation rather than constraint.

Limited Silver Linings Amid Bearish Backdrop

One constructive factor emerging on the horizon involves Nigerian cocoa production forecasts. The Nigerian Cocoa Association projects that 2025/26 production will decline -11% year-over-year to 305,000 MT from the 344,000 MT projected for 2024/25. This production contraction could provide modest support to global supply dynamics, though it remains insufficient to offset the broader surplus environment.

Historically, the cocoa market endured a dramatic -494,000 MT deficit in 2023/24—the largest shortfall in over six decades—which drove sustained price appreciation. ICCO subsequently revised 2024/25 estimates to a 49,000 MT surplus, marking the first annual surplus in four years, with global cocoa production expanding +7.4% year-over-year to 4.69 million MT. The transition from scarcity to abundance has fundamentally reset market psychology and the valuation environment for cocoa futures across both New York and London venues.