Global Cocoa Market Under Pressure: Slacks in Demand Meet Abundant Supplies

Cocoa prices retreated sharply during recent trading sessions, with both major futures contracts posting notable declines. March ICE NY cocoa closed down 95 points (-2.26%), while March ICE London cocoa fell 94 points (-3.08%). The selloff reflects a fundamental market imbalance where slacks in consumer demand are colliding with oversupply conditions that continue to weigh heavily on price support levels.

Chocolate Demand Weakness Crushing Cocoa Values

Consumer resistance to elevated chocolate prices has emerged as the primary headwind for the cocoa market. The world’s largest bulk chocolate manufacturer, Barry Callebaut AG, disclosed a striking 22% drop in sales volume within its cocoa division during the quarter ending November 30. The company cited “negative market demand and a prioritization of volume toward higher-return segments” as key drivers of the decline. This demand weakness is not isolated to individual processors—it reflects a systemic cooling in chocolate consumption across major markets.

Regional grinding reports paint a particularly bleak picture of cocoa utilization rates. The European Cocoa Association reported that Q4 European grinding volumes contracted 8.3% year-over-year to 304,470 MT, far exceeding market expectations of a 2.9% decline and marking the weakest Q4 performance in twelve years. Similarly, Q4 Asian grinding volumes fell 4.8% year-over-year to 197,022 MT according to the Cocoa Association of Asia. North American cocoa grindings demonstrated slight resilience, rising just 0.3% year-over-year to 103,117 MT, indicating that slacks in demand are truly global rather than regional phenomena.

Record Inventory Levels Reflect Slacking Market Appetite

Oversupply conditions have pushed ICE-monitored cocoa inventories to alarming levels, with holdings reaching a 3.25-month high of 1,812,564 bags during recent trading. These ballooning inventory levels underscore a critical imbalance between production capacity and actual market consumption, creating significant downward pressure on prices across both trading hubs.

The January lows proved particularly punishing, with New York cocoa dropping to its lowest level in 2.25 years and London cocoa sinking to a 2.5-year nadir. These price levels reflect the accumulated weight of the slacking demand dynamic combined with persistent supply surpluses.

Global Production Outlook: From Historic Deficits to Expanding Surpluses

The cocoa market’s fundamental backdrop has undergone a dramatic transformation over recent years. In mid-2023, the International Cocoa Organization (ICCO) documented a historic deficit of 494,000 MT for the 2023/24 season—the largest shortfall in over 60 years. That crisis-level deficit was driven by a 12.9% year-over-year production decline to 4.368 MMT.

However, the tide has turned decisively. ICCO subsequently estimated the 2024/25 season would deliver the first surplus in four years, calculating 49,000 MT of excess supply. Global production rebounded sharply by 7.4% year-over-year to 4.69 MMT. Looking further ahead, forecasters project the expansion of surpluses will accelerate. StoneX calculated a 287,000 MT surplus for 2025/26, while Rabobank—which earlier projected a 328,000 MT surplus—recently trimmed its forecast to 250,000 MT, still representing substantial oversupply. ICCO additionally reported that global cocoa stocks rose 4.2% year-over-year to 1.1 MMT as of late January.

Regional Supply Dynamics: Mixed Signals from Major Producers

Production trends across the world’s leading cocoa regions present a nuanced picture. Ivory Coast, responsible for the largest share of global supply, has seen its shipments to ports decline 3.8% year-over-year to 1.27 MMT through early February 2026, compared with 1.32 MMT during the same period the prior year. This represents a minor moderation in available supplies, though it pales against the expansion of global inventory buffers.

Tropical General Investments Group highlighted that favorable West African growing conditions are expected to support robust harvests throughout February and March in both Ivory Coast and Ghana, with pod counts running 7% above the five-year average according to major chocolate processors. This points toward sustained supply availability in the near term.

Nigeria presents a contrasting dynamic. As the world’s fifth-largest cocoa producer, Nigeria has experienced export weakness, with November shipments falling 7% year-over-year to 35,203 MT. The Nigerian Cocoa Association has signaled that 2025/26 production will decline 11% year-over-year to 305,000 MT from the prior year’s projected 344,000 MT—a meaningful reduction that provides modest price support despite the overwhelming surplus backdrop.

Market Consolidation Amid Structural Pressures

Recent price action has seen cocoa consolidate above its January lows, suggesting some stabilization following the initial shock of demand weakness. However, the fundamental pressures remain decidedly unfavorable. The persistent slacks in global chocolate demand, combined with ample inventory availability and expanding production surpluses, create a challenging environment for price recovery in the near to medium term. Until consumption patterns shift meaningfully or production adjusts downward, cocoa traders will likely continue navigating a buyer’s market with substantial room for further downside exploration.