Rising Cocoa Supply Weighs Heavily on Futures Markets

The cocoa market is grappling with mounting supply pressures as favorable weather patterns across West Africa bolster production outlook. March ICE NY cocoa futures fell 88 points (-1.48%) while London cocoa contract dropped 48 points (-1.11%), extending weekly losses and pushing NY cocoa to 1.5-week lows.

Weather and Harvests Boost Output Expectations

Optimal climate conditions in major producing regions are driving bullish supply sentiment. Ivory Coast farmers report that intermittent rainfall combined with sunshine is accelerating cocoa tree blooming cycles. Ghana’s agricultural sector confirms steady precipitation supports healthy pod development as the harmattan season approaches. These favorable conditions are setting the stage for robust yields—chocolate manufacturer Mondelez noted that current pod counts in West Africa stand 7% above the five-year average and substantially exceed last year’s harvest levels.

The Ivory Coast’s primary crop harvest has commenced with farmers expressing optimism regarding quality prospects. Concurrently, Ghana’s weather patterns continue supporting rapid pod development. This accumulated favorable data weighs on price momentum as markets price in ample supply availability.

Port Activity Signals Growing Supply

Tangible evidence of rising supply is materializing at West African ports. Ivory Coast government data released Monday showed farmers delivered 895,544 MT of cocoa to ports between October 1 and December 14—marginally up +0.2% from 894,009 MT in the corresponding prior-year period. As the world’s largest cocoa producer, Ivory Coast’s shipment volumes directly influence global market dynamics and continue to weigh on futures valuations.

Conflicting Market Pressures

Despite supply headwinds, certain factors provide price support. ICE cocoa inventories tracked at US ports fell to a 9-month low of 1,642,801 bags on Thursday, offering technical support. Investment demand may provide additional upside—NY cocoa’s inclusion in the Bloomberg Commodity Index beginning January could attract approximately $2 billion of passive fund buying during the initial week.

Citigroup adjusted its 2025/26 global cocoa surplus forecast downward to 79,000 MT from September’s 134,000 MT estimate, providing Tuesday price support. Meanwhile, Nigeria’s projected 2025/26 production will decline 11% year-over-year to 305,000 MT, limiting supply from the world’s fifth-largest producer.

Demand Concerns Persist

Weak consumption patterns continue to weigh on price trajectories. Hershey’s CEO reported “disappointing” chocolate sales during this Halloween season—a period representing nearly 18% of annual US candy sales. Q3 Asian cocoa grindings contracted 17% year-over-year to 183,413 MT, marking the lowest Q3 performance in nine years. European grindings fell 4.8% year-over-year to 337,353 MT, the weakest third-quarter reading in a decade. North American chocolate candy sales volume declined more than 21% in the 13-week period ending September 7 versus the prior year.

Longer-Term Supply Dynamics

The International Cocoa Organization previously reported that 2024/25 represents the first surplus year in four years, with production rising 7.4% year-over-year to 4.69 MMT. However, this improvement follows the unprecedented 2023/24 deficit of -494,000 MT—the largest in over 60 years when production collapsed 12.9% year-over-year to 4.368 MMT.

Regulatory developments also impact supply forecasts. The European Parliament’s November 26 approval of a one-year delay to deforestation regulations (EUDR) preserves existing agricultural import pathways, maintaining ample supply flows from African, Indonesian, and South American regions.

The convergence of rising West African output expectations, steady port arrivals, and tepid global demand continues to weigh on cocoa futures valuations despite technical support from inventory declines and index inclusion tailwinds.