Cocoa Market News: Global Prices Tumble as Supply Surges and Buyers Retreat

The cocoa market is facing severe downward pressure, with May ICE New York futures down over 5% and March ICE London futures declining nearly 5%, marking a seven-week-long selloff. May NY cocoa recently posted a fresh contract low, while March London cocoa hit its lowest level in 2.75 years for nearest-month contracts. This sharp correction reflects a fundamental shift in cocoa market dynamics, where abundant global supplies are colliding head-on with weakening demand from chocolate manufacturers worldwide.

The Cocoa Supply Crisis: Too Much of a Good Thing

The global cocoa market is drowning in inventory. Recent forecasts paint a stark picture of oversupply that threatens to persist for years. StoneX predicted a global cocoa surplus of 287,000 MT for the 2025/26 season, with an additional 267,000 MT surplus projected for 2026/27. More immediately, the International Cocoa Organization reported that global cocoa stocks jumped 4.2% year-over-year to 1.1 million metric tons, exacerbating the bearish sentiment in the cocoa market.

The inventory buildup is particularly evident in ICE warehouses, where cocoa stocks recently climbed to a 5.75-month high of 2,155,913 bags. This surge reflects a reluctance among international buyers to absorb cocoa at the official farm-gate prices set by Ivory Coast and Ghana—prices that remain substantially elevated compared to current world market levels. Unable to move inventory at desired prices, West African producers are facing severe margin pressure.

In response to the deteriorating market conditions, major cocoa-producing nations have been forced to cut prices dramatically. Ghana slashed its official cocoa farmer payment by nearly 30% for the 2025/26 growing season, while the Ivory Coast signaled consideration of a 35% price reduction for its mid-crop harvest beginning in April. These cuts underscore the intensity of supply-side stress in the cocoa market.

Adding to the supply headwinds, favorable growing conditions across West Africa are boosting near-term production prospects. Pod counts in cocoa-growing regions recently came in 7% above the five-year average, and farmers report significantly larger and healthier pods than in the prior year. The Ivory Coast’s mid-crop, which typically accounts for roughly 25% of annual production, is expected to yield between 400,000 and 450,000 MT this season. Meanwhile, Nigeria—the world’s fifth-largest cocoa producer—saw its December exports surge 17% year-over-year to 54,799 MT, further adding to global supply pressure on cocoa prices.

Cocoa Market News on the Demand Front: Consumers Vote with Their Wallets

While supply concerns dominate the headlines, the demand side of the cocoa market tells an equally troubling story. Consumers have become increasingly price-sensitive, resisting the elevated chocolate prices that manufacturers have imposed over the past two years. This resistance is translating into measurable declines in volume across the sector.

Barry Callebaut, the world’s largest bulk chocolate producer, reported a 22% drop in sales volume within its cocoa division for the quarter ending November 30. The company attributed this decline to “negative market demand and a prioritization of volume toward higher-return segments within cocoa,” signaling that even bulk chocolate manufacturers are struggling to maintain sales at current price levels.

The weakness extends across major cocoa-consuming regions. European cocoa grindings fell 8.3% year-over-year to 304,470 MT in the fourth quarter, substantially worse than the expected 2.9% decline and marking the lowest Q4 level in twelve years. Asian cocoa grindings also declined, dropping 4.8% year-over-year to 197,022 MT. Even North America, typically more resilient, saw cocoa grindings rise just 0.3% year-over-year to 103,117 MT—essentially flat and far below historical growth rates. These figures reveal a cocoa market facing genuine demand destruction, not merely cyclical softness.

Cocoa Market Outlook: Watching for Inflection Points

Despite the overwhelming bearish backdrop, the cocoa market does have some supportive factors to consider. The Ivory Coast projects production could decline 10.8% year-over-year to 1.65 million MT for 2025/26 from 1.85 million MT the prior year, driven partly by natural cycles and pest pressures. Port delivery data also suggests some tightening: cumulative cocoa shipments to Ivory Coast ports through mid-February totaled 1.31 million MT, down 3.7% from the same period last year.

Nigeria’s Cocoa Association projects Nigerian production will fall 11% year-over-year to 305,000 MT for the 2025/26 crop, down from an estimated 344,000 MT for 2024/25. These production headwinds, while modest relative to current surplus estimates, may provide support as the season progresses.

The International Cocoa Organization’s December estimate put the 2024/25 global cocoa surplus at just 49,000 MT—marking the first surplus in four years—while noting that global production rose 7.4% year-over-year to 4.69 million MT. However, Rabobank recently tempered expectations by cutting its 2025/26 surplus forecast to 250,000 MT from a prior estimate of 328,000 MT, suggesting analysts are recalibrating their cocoa market outlook as new harvest data emerges.

The cocoa market faces a complex backdrop: near-term supplies are ample and demand has softened materially, but production projections suggest eventual rebalancing. Participants tracking cocoa market developments should monitor both supply tightening and evidence of demand stabilization before declaring a bottom.