Abundant Global Cocoa Supplies and Weakening Demand Create Perfect Storm for Price Declines

Cocoa futures markets experienced significant losses this week as robust harvests collided with flagging consumer interest. March ICE NY cocoa closed down 283 points (-6.38%), while March ICE London cocoa #7 fell 208 points (-6.72%), with London reaching its lowest level in 2.25 years. The fundamental mismatch between plentiful global supplies and subdued demand has created persistent downward pressure on valuations across the market.

The supply situation remains notably abundant. According to the International Cocoa Organization (ICCO), global cocoa stocks for 2024/25 have risen 4.2% year-over-year to 1.1 million metric tons. This ample inventory situation is being further bolstered by favorable growing conditions in West Africa, the world’s primary production region. Tropical General Investments Group recently highlighted that favorable weather in West Africa is expected to enhance the February-March cocoa harvest in the Ivory Coast and Ghana, with farmers reporting larger and healthier pods compared to the previous year. Chocolate manufacturer Mondelez noted that the current cocoa pod count in West Africa stands 7% above the five-year average and is materially higher than last year’s production levels. The Ivory Coast, the world’s largest cocoa producer, has begun harvesting its main crop with farmers expressing optimism about crop quality.

Demand Crisis: Major Chocolate Makers Report Sharp Volume Declines

The flip side of the supply equation tells a troubling story for price support. Consumer reluctance to purchase chocolate at elevated price points has compelled major industry players to significantly curtail their operations. Barry Callebaut AG, the world’s largest bulk chocolate supplier, reported a striking 22% decline in sales volume within its cocoa division for the quarter ending November 30. The company attributed this downturn to “negative market demand and a prioritization of volume toward higher-return segments within cocoa.” This represents a critical demand weakness that has cascaded through the entire supply chain.

Processing Activity Collapses Across Key Markets

Industry crushing volumes paint an even starker picture of demand deterioration. On December 15, the European Cocoa Association reported that fourth-quarter European processing volumes contracted 8.3% year-over-year to 304,470 metric tons—substantially worse than the anticipated decline of 2.9% and marking the weakest fourth quarter for the continent in 12 years. Similarly, the Cocoa Association of Asia reported that Q4 Asian processing volumes fell 4.8% year-over-year to 197,022 metric tons. North American results showed marginal improvement, with the National Confectioners Association reporting only a 0.3% year-over-year increase to 103,117 metric tons. This consistent weakness across all major grinding hubs underscores the severity of global demand contraction.

West African Harvest Boosts Available Supplies

The convergence of abundant supplies with tightening demand has created an unusual dynamic in farmer behavior. Despite favorable harvest prospects, West African cocoa farmers have adopted a cautious approach to shipments. According to cumulative data through January 25, 2026, the Ivory Coast has shipped 1.20 million metric tons of cocoa to ports during the current marketing year (October 1, 2025 through January 25, 2026), representing a 3.2% decline from the 1.24 million metric tons shipped during the equivalent period a year prior. This reluctance to aggressively market supplies reflects farmer awareness that current price levels offer insufficient returns, even as harvest volumes expand.

Storage Levels Climb as Sales Stagnate

Exchange-monitored inventory dynamics further underline price pressures. ICE cocoa inventories held in US ports dipped to a 10.5-month low of 1,626,105 bags on December 26, but have since rebounded to 1,773,618 bags—the highest level in 2.5 months as of Tuesday. This inventory accumulation occurs precisely when demand should be absorbing supply, creating a bearish technical picture for prices. The failure of end-user demand to absorb available stocks suggests that price reductions may be necessary before meaningful volume purchases resume.

Regional Supply Dynamics: Nigeria Offset by Africa’s Abundance

Not all production regions are contributing equally to supply pressures. Nigeria, the world’s fifth-largest cocoa producer, represents an exception to the general supply abundance theme. November cocoa exports from Nigeria declined 7% year-over-year to 35,203 metric tons. The Nigerian Cocoa Association projects that production for the 2025/26 crop year will contract 11% year-over-year to 305,000 metric tons, down from a projected 344,000 metric tons in the 2024/25 cycle. This supply reduction from Nigeria provides modest price support but proves insufficient to counteract the production surges occurring elsewhere.

Production Outlook Signals Sustained Supply Pressure

Longer-term production forecasts suggest that robust supplies will persist, limiting upside price potential. The ICCO substantially reduced its 2024/25 global surplus estimate to 49,000 metric tons on November 28, down from a prior estimate of 142,000 metric tons. However, the organization simultaneously lowered its 2024/25 global production estimate to 4.69 million metric tons from the previous 4.84 million metric tons—a reduction that still represents a significant 7.4% year-over-year production increase. This expansion follows several years of supply constraints, as the 2023/24 crop year generated the largest global cocoa deficit in over 60 years at minus 494,000 metric tons, with production falling 12.9% year-over-year to 4.368 million metric tons.

The current production recovery, combined with moderating demand, has shifted the market from deficit to surplus in a compressed timeframe. Rabobank cut its 2025/26 global cocoa surplus projection to 250,000 metric tons from a November forecast of 328,000 metric tons, suggesting that supply pressures may persist into the next production cycle. For cocoa prices to achieve meaningful recovery, either global demand must stabilize and strengthen, or West African producers must exercise even greater supply restraint than currently observed. Without substantial demand improvement, the abundant supply environment is likely to keep a ceiling on price recovery attempts.

Disclaimer: This analysis is provided for informational purposes only. All data and information contained herein reflects publicly available reports from the International Cocoa Organization, regional industry associations, and company statements as of the dates referenced.