Abundant Cocoa Supplies and Weakening Demand Create Downward Pressure on Global Markets

Recent trading activity in cocoa futures markets signals persistent weakness as abundant global stockpiles and flagging consumer interest combine to drag prices lower. Markets are grappling with a supply-demand imbalance that shows few signs of immediate resolution, with both structural oversupply and cyclical demand concerns weighing heavily on price trajectories. The confluence of these bearish factors underscores a challenging near-term outlook for producers and market participants.

Global Supplies Remain Plentiful Despite Regional Variations

The cocoa market faces an extended period of ample supplies, with multiple forecasters projecting significant surpluses through the next marketing cycles. StoneX estimated a global surplus of 287,000 MT for the 2025/26 season, followed by another 267,000 MT surplus in 2026/27. More broadly, the International Cocoa Organization (ICCO) documented rising global cocoa stocks, which climbed 4.2% year-over-year to 1.1 MMT, signaling abundant inventories across producing and consuming regions.

These surplus projections reflect the robust harvests anticipated in West Africa, where favorable growing conditions have created expectations for larger and higher-quality pods during the current harvest season. Chocolate maker Mondelez noted that the latest cocoa pod count in West Africa stands 7% above the five-year average and materially exceeds last year’s levels. The Ivory Coast, world’s largest cocoa producer, has seen optimal conditions support both pod development and farmer confidence in crop quality.

Paradoxically, despite abundant harvests materializing, farmers in major producing regions have adopted a more cautious stance toward marketing, creating a temporary supply management dynamic. Ivory Coast shipments to ports in the current marketing year (October 1, 2025, through mid-February 2026) totaled 1.20 MMT, representing a 3.2% decline from 1.24 MMT in the comparable prior-year period. This reduced marketing activity, though notable, pales against the backdrop of structural oversupply conditions pressuring prices.

Demand Weakness Intensifies Price Headwinds

While abundant supplies provide the foundational bearish pressure, deteriorating demand conditions have accelerated the downtrend. Consumer resistance to elevated chocolate prices has manifested in declining purchase volumes, a dynamic that has reverberated through the processing sector globally.

Barry Callebaut AG, the world’s largest bulk chocolate producer, reported a steep 22% decline in cocoa division sales volume for the quarter ending November 30, citing “negative market demand and a prioritization of volume toward higher-return segments.” This weakness among major industrial processors reflects downstream consumer pullback from chocolate purchases at prevailing price levels.

Grinding data across three major consumption regions paints a uniformly weak picture. The European Cocoa Association reported that Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 MT, substantially worse than the anticipated 2.9% decline and marking the lowest Q4 performance in 12 years. Meanwhile, the Cocoa Association of Asia reported Q4 Asian grindings declined 4.8% year-over-year to 197,022 MT. Even in North America, typically a stable demand region, the National Confectioners Association noted that Q4 grindings rose a mere 0.3% year-over-year to 103,117 MT—essentially flat growth amid a period of abundant supply.

Price Weakness Extends as Inventories Swell

The combination of plentiful supplies and tepid demand has translated into concrete price weakness. March ICE NY cocoa futures posted a 2.25-year nearest-contract low, while London cocoa futures recorded a 2.5-year low, reflecting the sustained pressure emanating from fundamental imbalances.

Physical cocoa stockpiles held at US ports, monitored by the ICE exchange, have rebounded sharply from a December low of 1,626,105 bags to 1,775,219 bags, marking a 2.5-month high. This inventory accumulation represents a classic bearish signal, as stored supplies increasingly available for processing suggest limited near-term supply tightness to underpin prices.

Selective Regional Supply Challenges Offer Limited Support

Among the few supportive developments, production challenges in secondary supply sources provide modest countervailing factors. Nigeria, the world’s fifth-largest cocoa producer, faces structural production headwinds. November cocoa exports from Nigeria declined 7% year-over-year to 35,203 MT, while Nigeria’s Cocoa Association projects 2025/26 production will fall 11% year-over-year to 305,000 MT from a projected 344,000 MT in the prior year. These supply constraints in Nigeria, though real, remain insufficient to offset the abundant supplies flowing from West Africa’s primary production zones.

Market Perspective: Historical Context and Forward Outlook

The current oversupply environment marks a notable departure from the acute deficits experienced in prior years. ICCO had previously revised its 2023/24 cocoa deficit to a record -494,000 MT—the largest deficit in over 60 years—with production plummeting 12.9% year-over-year to 4.368 MMT. However, the market has since normalized, with ICCO estimating a 2024/25 surplus of 49,000 MT (the first surplus in four years) as production rebounded 7.4% year-over-year to 4.69 MMT.

Looking ahead, Rabobank recently reduced its 2025/26 global cocoa surplus forecast to 250,000 MT from a prior November estimate of 328,000 MT, suggesting some modest expectation moderation. However, the fundamental reality of abundant supplies relative to flagging demand suggests that price discovery will continue to reflect persistent bearish pressure in near-term trading. The scale of supply relative to consumption appetite, even with abundant crops, indicates that rebalancing may require extended time and perhaps further price depreciation to stimulate demand recovery.