Cocoa Market Faces Headwinds as Supply Gains Outpace Weakening Demand

The Global Cocoa Beans Price Downturn Reflects Shifting Market Dynamics

Cocoa futures retreated this week as market participants reassess the balance between supply expansion and slumping chocolate consumption. March contracts on ICE New York slipped 44 points to close -0.74%, while London’s March contract declined 24 points or -0.55%, pushing cocoa beans price to a one-week trough. The pullback signals a recalibration in trader positioning ahead of a potentially abundant harvest season in West Africa.

West African Harvest Prospects Brighten Supply Outlook

The primary driver behind softer cocoa beans price levels is an improving production landscape across major growing regions. In Ivory Coast, the world’s top cocoa producer, favorable weather patterns—a combination of regular rainfall and sunshine—are accelerating bloom development. Ghanaian farmers similarly report beneficial moisture levels supporting pod formation before the dry harmattan season arrives. Mondelez, the global confectionery giant, underscored this optimistic supply picture by noting that current West African cocoa pod counts stand 7% above the five-year average and materially higher than the prior year’s harvest.

Shipment data reinforces the bullish supply narrative. Through mid-December in the current marketing year, Ivory Coast farmers delivered 895,544 MT to ports—a marginal 0.2% increase year-over-year. Meanwhile, inventories held at US ports fell to a nine-month low of 1.64 million bags, offering modest price support despite ample global supplies on the horizon.

Demand Weakness Emerges as a Structural Headwind

Countering supply gains is a pronounced slump in global cocoa consumption. Chocolate maker Hershey reported “disappointing” Halloween season sales, a troubling signal given that the holiday represents nearly 18% of annual US candy sales. Regional grindings data paint an even grimmer picture: Asia’s Q3 cocoa grindings contracted 17% year-over-year to a nine-year low, while European mills processed 4.8% less cocoa than the prior year’s third quarter—marking the lowest quarterly throughput in a decade. North American chocolate candy sales volume fell over 21% in recent weeks, suggesting consumer pullback across major markets.

Mixed Signals on Production Across Key Regions

Nigeria, the world’s fifth-largest cocoa producer, represents a supply-side concern. The Nigerian Cocoa Association projects 2025/26 output will slide 11% year-over-year to 305,000 MT. This contraction offers some price support but fails to offset the supply abundance emerging from West Africa’s leading producers.

Structural Catalysts Present Medium-Term Wildcards

Two developments carry potential implications for cocoa beans price trajectories. Citigroup recently slashed its 2025/26 global surplus forecast to 79,000 MT from 134,000 MT—a substantial revision signaling tightening conditions. Additionally, the inclusion of NY cocoa futures in Bloomberg’s Commodity Index beginning January could attract an estimated $2 billion in passive inflows during the first week of the new year, providing temporary support.

Conversely, the European Parliament’s one-year delay to deforestation regulations (EUDR) maintains a lenient import environment, allowing continued cocoa sourcing from regions experiencing land-use conversion. This regulatory reprieve supports abundant supply flows and restrains upside potential for cocoa beans price.

Outlook: Near-Term Pressure Likely to Persist

The collision of weakening demand and strengthening supply creates a challenging near-term backdrop for price appreciation. While production setbacks in Nigeria and technical support from index inclusion offer modest counterweight, the fundamental supply-demand imbalance tilts decisively bearish for cocoa beans price momentum through the near term.