Cocoa Market Under Pressure: Abundant Global Reserves Meet Weakening Demand

Cocoa futures markets are experiencing sustained downward pressure as abundant supplies collide with flagging consumer interest. The March ICE NY contract recently declined by 12 points (-0.29%), while March ICE London cocoa fell 1 point (-0.03%), extending a month-long decline that has pushed both markets to their lowest levels in over two years. This convergence of ample inventory and slack demand has created a challenging environment for both producers and processors worldwide.

Global Supply Glut Intensifies Market Headwinds

StoneX’s recent analysis projects that the global cocoa market will experience surpluses of 287,000 metric tons during the 2025/26 season, followed by a 267,000 MT surplus in 2026/27. These forecasts paint a picture of continued oversupply, with the International Cocoa Organization (ICCO) reporting that global cocoa stocks increased 4.2% year-over-year to reach 1.1 million metric tons. Meanwhile, ICE-monitored cocoa inventories at US ports have climbed to a 2.5-month high of 1,775,219 bags, a sharp rebound from the December low of 1,626,105 bags. This buildup of available supplies remains a key factor weighing on price recovery prospects.

Consumption Weakness Across Major Producing Regions

Demand deterioration has become the dominant price driver across all major cocoa markets. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported a 22% drop in sales volume within its cocoa division for the quarter ending November 30, citing persistent “negative market demand” as consumers resist elevated chocolate prices. This weakness is mirrored in grinding data from production centers worldwide. European cocoa grindings in Q4 fell 8.3% year-over-year to 304,470 MT, the lowest fourth-quarter performance in 12 years and a steeper decline than the anticipated 2.9% drop. Asian cocoa grindings similarly retreated 4.8% year-over-year to 197,022 MT in the same quarter. North American facilities showed minimal strength, with grindings rising just 0.3% year-over-year to 103,117 MT. This synchronized demand contraction across processing hubs underscores the structural headwinds facing the market.

West African Harvest Prospects Add to Supply Narrative

Favorable growing conditions in West Africa are expected to support a robust February-March cocoa harvest across the Ivory Coast and Ghana, offering little relief to producer economics given current price levels. Tropical General Investments Group has noted that farmers in these regions are reporting larger, healthier pods compared to the prior year. Chocolate maker Mondelez corroborates this assessment, indicating that current cocoa pod counts in West Africa are running 7% above the five-year average and materially higher than last year’s crop. With the Ivory Coast’s main crop harvest already underway and farmer sentiment optimistic, the pipeline for additional supplies remains robust despite persistent price weakness.

However, some supply-side relief is emerging from higher-cost producers. Ivory Coast farmers have shipped 1.20 million MT through ports thus far in the 2025-26 marketing year (October 1, 2025 through January 25, 2026), representing a 3.2% year-over-year decline from the comparable period last year. Meanwhile, Nigeria—the world’s fifth-largest cocoa producer—is seeing export volumes constrain. Nigerian cocoa exports in November declined 7% year-over-year to 35,203 MT, with the Nigerian Cocoa Association projecting that 2025/26 production will fall 11% year-over-year to 305,000 MT from the prior year’s estimated 344,000 MT. These supply reductions provide modest price support but remain insufficient to offset the combined effects of ample reserves and subdued consumption.

Medium-Term Supply Dynamics Offer Limited Upside

Market fundamentals have shifted significantly from the structural deficits that characterized recent years. The ICCO reported in May that the 2023/24 season produced the largest global cocoa deficit in over 60 years at -494,000 MT, following a 12.9% year-over-year production decline to 4.368 MMT. However, that deficit dynamic has reversed. In December, ICCO estimated a 2024/25 global surplus of 49,000 MT—marking the first surplus in four years—as global production rebounded 7.4% year-over-year to 4.69 MMT. Looking ahead, Rabobank recently cut its 2025/26 global surplus forecast to 250,000 MT from a November estimate of 328,000 MT. While this downward revision suggests some tightening, the persistent pattern of abundant supplies relative to consumption demand remains the overarching theme constraining price recovery potential.