Global Cocoa Market Faces Structural Headwinds as Price Plunge Continues

Cocoa prices are experiencing a significant downturn driven by a confluence of demand erosion and abundant global supplies. March ICE NY cocoa futures declined 276 points, or 6.184%, while March ICE London cocoa fell 211 points, or 6.57% today. This marks the continuation of a two-week decline, with New York cocoa posting a 2-year nearest-futures low and London cocoa hitting a 2.25-year nearest-futures low.

Demand Crisis: How Consumers Are Reshaping the Chocolate Market

The primary headwind battering cocoa prices stems from deteriorating demand as consumers increasingly resist elevated chocolate prices. On Wednesday, Barry Callebaut AG—the world’s largest bulk chocolate manufacturer—disclosed a troubling -22% decline in sales volume within its cocoa division for the quarter ending November 30, directly attributed to “negative market demand and a prioritization of volume toward higher-return segments within cocoa.”

This demand weakness extends across major global regions. Q4 European cocoa grindings fell -8.3% year-over-year to 304,470 MT according to the European Cocoa Association, representing a sharper contraction than the anticipated -2.9% decline and marking the lowest Q4 figure in over a decade. Similarly, the Cocoa Association of Asia reported Q4 Asian cocoa grindings tumbled -4.8% year-over-year to 197,022 MT. In North America, the National Confectioners Association noted Q4 cocoa grindings rose merely +0.3% year-over-year to 103,117 MT—essentially flat growth.

Supply Dynamics: African Harvests Accelerate Amid Favorable Growing Conditions

Compounding the demand challenge is a burgeoning supply situation across key producing regions. The International Cocoa Organization (ICCO) reported today that 2024/25 global cocoa stocks increased +4.2% year-over-year to 1.1 MMT, adding considerable weight to downward price pressure.

Favorable agricultural conditions in West Africa are amplifying supply concerns. Tropical General Investments Group recently highlighted that optimal growing conditions in West Africa are anticipated to boost February-March cocoa harvests in the Ivory Coast and Ghana, with farmers reporting comparatively larger and healthier cocoa pods versus the previous year. Chocolate manufacturer Mondelez corroborated these observations, noting the latest cocoa pod count in West Africa stands 7% above the five-year average and is “materially higher” than last year’s harvest. The Ivory Coast’s primary crop harvest has commenced with farmers expressing confidence in crop quality.

Data from the world’s largest cocoa producer reflects this supply abundance. Ivory Coast farmers shipped 1.16 MMT of cocoa to ports during the current marketing year (October 1 through January 18), representing a -3.3% decline from 1.20 MMT in the comparable period last year. However, even with this reduced shipment level, global supplies remain ample relative to demand.

Inventory Pressures Mount Despite Some Regional Production Setbacks

While certain regions are reducing output, global inventory levels paint a bearish picture for prices. After hitting a 10.25-month low of 1,626,105 bags on December 26, ICE-monitored cocoa inventories held in US ports have rebounded significantly—a negative signal for prices. ICE cocoa inventories climbed to a 2-month high of 1,752,451 bags by Thursday, confirming the inventory recovery trend.

Nigeria, the world’s fifth-largest cocoa producer, represents a noteworthy exception to abundant supply trends. Nigeria’s November cocoa exports fell -7% year-over-year to 35,203 MT, indicating tightening supplies from this key origin. The Nigeria Cocoa Association projects a more severe production contraction ahead, forecasting 2025/26 cocoa production will decline by -11% year-over-year to 305,000 MT, compared against a projected 344,000 MT for the 2024/25 crop year.

Market Rebalancing: ICCO’s Shift from Deficit to Surplus Signals Structural Change

The International Cocoa Organization’s recent revisions underscore a dramatic market rebalancing. On November 28, ICCO cut its global 2024/25 cocoa surplus estimate to 49,000 MT from a prior estimate of 142,000 MT—a significant downward revision that nonetheless maintains a surplus outlook. ICCO simultaneously lowered its global cocoa production estimate for 2024/25 to 4.69 MMT from 4.84 MMT previously.

This represents a striking turnaround from historical deficits. On May 30, ICCO had revised its 2023/24 global cocoa deficit to -494,000 MT, described as the largest deficit in over 60 years. The 2023/24 crop year saw cocoa production decline by -12.9% year-over-year to 4.368 MMT. However, on December 19, ICCO estimated a 2024/25 global cocoa surplus of 49,000 MT, marking the first surplus in four years—a fundamental shift in market structure. ICCO additionally noted global cocoa production in 2024/25 rose by +7.4% year-over-year to 4.69 MMT, driving the pivot toward oversupply.

Rabobank has reinforced this surplus outlook, cutting its 2025/26 global cocoa surplus estimate to 250,000 MT from its November forecast of 328,000 MT, confirming sustained supply pressure ahead.

Policy Delays and Long-Term Supply Implications

A regulatory development provided temporary reprieve for cocoa prices before being undermined by the broader supply reality. On November 26, the European Parliament approved a 1-year delay to the EU deforestation regulation (EUDR), a decision that keeps cocoa supplies ample. The EUDR regulation aims to combat deforestation by restricting EU imports of key commodities including cocoa sourced from regions experiencing forest loss. This delay permits EU countries to continue importing agricultural products from African, Indonesian, and South American regions where deforestation persists, essentially extending the timeline for supply-side supportive measures.

The convergence of weak demand signals, elevated global inventories, record African harvest expectations, and abundant supply projections creates a multifaceted bearish environment for cocoa prices. While production disruptions in Nigeria offer modest support, the structural shift toward surplus—particularly the ICCO’s shift to 49,000 MT surplus for 2024/25 following four years of deficits—signals a material change in the market’s fundamental supply-demand balance that may persist for several years.