Just noticed cocoa futures are getting hammered pretty hard lately. NY's March contract dropped about 4% today and London's down over 6%, both hitting multi-year lows. The whole cocoa market seems to be caught in this downward spiral right now.

What's interesting is that buyers are basically ghosting the official prices coming out of Ivory Coast and Ghana. Ghana already cut what they're paying farmers by nearly 30% for next season, and word is Ivory Coast might do the same. These two countries produce more than half the world's cocoa, so that tells you something about the pressure on prices.

The supply side looks pretty bloated honestly. Forecasts are calling for surpluses of 287,000 MT this season and another 267,000 MT next year. Plus ICE cocoa inventories just hit a 4-month high of nearly 2 million bags. Meanwhile, demand is weak across the board - chocolate makers are reporting volume declines because consumers are pushing back on high chocolate prices. Barry Callebaut, the biggest bulk chocolate producer, saw cocoa division sales volume drop 22% last quarter.

Grinding reports from Europe, Asia, and North America all point to softer demand too. European cocoa grindings fell 8.3% year-over-year last quarter, which was way worse than expected. Even the growing conditions in West Africa are working against cocoa prices - farmers are reporting bigger and healthier pods, and the pod count is running 7% above the five-year average.

Nigeria's also exporting more cocoa, which adds to the supply pressure. But there's one silver lining - Nigeria's cocoa production is expected to fall 11% next season. Still, with all this supply and weak demand, it's tough to see cocoa catching a bid anytime soon.