Cocoa Prices Hit Multi-Year Lows Amid Global Supply Glut and Weakening Demand

Cocoa markets have entered a severe downturn, with March ICE NY cocoa closing down 297 points (-7.24%) and March ICE London cocoa #7 sliding 206 points (-6.97%) on Tuesday. The New York contract reached a 2.25-year nearest-futures low, marking one of the sharpest declines in recent memory. Over the past six weeks, cocoa prices have been in freefall, with London cocoa plunging to a 2.5-year nadir on January 30. This sustained selloff reflects a confluence of bearish factors: abundant global cocoa supplies meeting slack consumer demand. Industry analysts tracking these moves note that the combination has created a perfect storm for price weakness.

The Sharp Nosedive: March Cocoa Futures Post Steepest Losses

Tuesday’s decline accelerated after new export data showed Nigerian cocoa shipments at 54,799 MT in December, up 17% year-over-year. Nigeria ranks as the world’s fifth-largest cocoa producer, making its export surge particularly significant for global pricing dynamics. The immediate market reaction was swift and unforgiving, as traders digested the implications of rising African cocoa availability just as demand signals flickered across key consuming regions.

Supply Surge Collides with Weakening Demand

Multiple forecasts underscore the structural oversupply pressuring cocoa values. On January 29, StoneX projected a global cocoa surplus of 287,000 MT for the 2025/26 season, with a 267,000 MT surplus expected in 2026/27—indicating sustained pressure ahead. The International Cocoa Organization (ICCO) reported on January 23 that global cocoa stocks rose 4.2% year-over-year to 1.1 million metric tons, adding weight to bearish sentiment.

Consumer demand has proven especially disappointing. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported a staggering 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 contraction at a market heavyweight signals broader consumption weakness across the chocolate industry.

Regional grinding data paints an equally grim picture. The European Cocoa Association reported that Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 MT—a steeper decline than the anticipated -2.9% and the weakest Q4 performance in 12 years. Asian cocoa grindings also disappointed, declining 4.8% year-over-year to 197,022 MT in Q4, while North American grindings barely budged with a meager +0.3% year-over-year rise to 103,117 MT.

Market Inventory Buildup Pressures Cocoa Values

The buildup of physical inventories has amplified price declines. ICE-monitored cocoa inventories climbed to a 3.5-month high of 1,836,511 bags on Tuesday, signaling robust warehouse stockpiles that weigh heavily on market sentiment. When abundant supplies meet weak demand, inventory accumulation becomes a self-reinforcing bearish cycle.

Shipping delays from Ivory Coast ports provide modest support, however. Cumulative data showed that Ivory Coast farmers shipped 1.27 million MT to ports in the current marketing year (October 1, 2025 through February 8, 2026), down 3.8% from 1.32 million MT in the year-ago period. As the world’s largest cocoa producer, any slowdown in Ivory Coast flows carries outsized significance for global balances.

Favorable Growing Conditions in West Africa Extend the Bearish Outlook

Growing conditions across West Africa present another headwind for prices. Tropical General Investments Group noted that favorable weather in West Africa is expected to boost the February-March cocoa harvest in Ivory Coast and Ghana, with farmers reporting larger and healthier pods than a year prior. Mondelez confirmed that the latest cocoa pod count in West Africa stands 7% above the five-year average and materially higher than last year’s crop—a bullish signal for future supplies that remains bearish for current prices.

The Ivory Coast’s main crop harvest has commenced, and farmer sentiment is optimistic regarding quality. In contrast, Nigeria’s Cocoa Association projects that Nigerian cocoa production will contract by 11% year-over-year in 2025/26 to 305,000 MT, down from a projected 344,000 MT for 2024/25. This anticipated decline represents one of the few bright spots in an otherwise oversupplied market.

The Broader Context: From Deficit to Surplus

The current glut marks a dramatic reversal from recent years. On May 30, ICCO issued a sobering assessment of the 2023/24 season, revising its global cocoa deficit to an unprecedented -494,000 MT—the largest shortfall in over 60 years—with production plummeting 12.9% year-over-year to 4.368 million MT.

However, conditions have shifted markedly. ICCO’s December 19 estimate for 2024/25 showed a 49,000 MT surplus, the first surplus in four years, with global production rebounding 7.4% year-over-year to 4.69 million MT. Rabobank last Tuesday trimmed its 2025/26 surplus forecast to 250,000 MT from its prior estimate of 328,000 MT, yet the trajectory remains toward sustained oversupply.

What’s Next for Cocoa Markets?

The cocoa market stands at an inflection point. The transition from historic deficits to mounting surpluses has fundamentally reset the supply-demand calculus, explaining why cocoa prices have compressed to multi-year lows despite global production challenges in individual seasons. Traders and cocoa consumers watching these moves must grapple with a new market reality: abundant supplies and consumer price resistance are likely to cap upside volatility for the foreseeable future. The combination of warehouse inventory strength, grinding weakness across major regions, and favorable harvest conditions in top-producing nations suggests cocoa’s bearish environment may persist well into the spring months and beyond.