Global Cocoa Supply Tightens: Port Delays and Production Cuts Propel Prices to 2-Week Highs

Cocoa futures markets are experiencing significant momentum today, with March ICE NY cocoa (CCH26) rallying +295 points (+4.96%) and March ICE London cocoa (CAH26) jumping +275 points (+6.52%), marking cocoa’s highest level in two weeks. The sharp upward move reflects deepening concerns about supply constraints in a market already grappling with structural imbalances.

Ivory Coast Port Bottlenecks Signal Supply Stress

Recent port data from the world’s leading cocoa supplier paints a concerning picture for global cocoa availability. During the week ending December 28, Cote d’Ivoire cocoa farmers delivered just 59,708 MT to ports—a steep 27% decline year-over-year. On a cumulative basis, the 2024/25 marketing season (October 1 through December 28) shows Cote d’Ivoire cocoa shipments at 1.029 MMT, representing a 2.0% decrease from the 1.050 MMT recorded in the equivalent period of the previous year.

These slowing arrival rates have become a focal point for traders concerned about tightness in global cocoa supplies, providing immediate price support as inventory expectations shift downward.

Multiple Support Factors Reinforce the Rally

Cocoa’s bullish momentum is underpinned by several concurrent developments. First, ICE-monitored cocoa inventories at U.S. ports have contracted to a 9.5-month low of 1,626,105 bags as of last Friday, further constraining available supplies for chocolate manufacturers and end-users.

Second, financial flows are entering the market. Cocoa futures are benefiting from anticipated index-related buying following the inclusion of cocoa contracts in the Bloomberg Commodity Index (BCOM), effective January. Citigroup estimates this addition could attract approximately $2 billion in buying activity for New York cocoa contracts, creating additional tailwinds for prices.

Third, structural supply forecasts have turned decidedly bearish. In late November, the International Cocoa Organization (ICCO) slashed its 2024/25 global cocoa surplus forecast to just 49,000 MT from a prior estimate of 142,000 MT, while simultaneously reducing its production outlook to 4.69 MMT from 4.84 MMT. Separately, Rabobank cut its 2025/26 global surplus estimate to 250,000 MT from 328,000 MT.

Weather Benefits May Prove Temporary

Despite bullish supply signals, cocoa has faced recent headwinds from favorable growing conditions in West Africa. Farmers across Cote d’Ivoire and Ghana have reported beneficial weather patterns—a combination of adequate rainfall and sunshine supporting cocoa tree bloom and pod development ahead of the approaching harmattan season. Confectionery manufacturer Mondelez noted that current West African cocoa pod counts are running 7% above the five-year average and substantially higher than last season’s harvest, suggesting near-term production potential.

Main crop harvesting in Cote d’Ivoire is underway, with farmers expressing cautious optimism regarding yield quality.

Demand Weakness Persists as Headwind

A notable counterweight to supply concerns is anemic global cocoa demand. Regional grindings data reveals persistent weakness: Asian cocoa grindings fell 17% year-over-year in Q3 to 183,413 MT—the weakest third quarter in nine years. European cocoa grindings declined 4.8% year-over-year to 337,353 MT in Q3, marking a 10-year low for that quarter. North American grindings rose 3.2% year-over-year to 112,784 MT, though this figure was distorted by the inclusion of additional reporting entities.

This demand softness suggests cocoa consumption may struggle to absorb potential supply improvements, potentially capping upside price moves.

Nigeria Production Pressures Add to Supply Story

Compounding constraints from Cote d’Ivoire cocoa production challenges, Nigeria—the world’s fifth-largest cocoa producer—is facing its own production headwinds. Nigeria’s Cocoa Association projects that 2025/26 production will contract 11% year-over-year to 305,000 MT from an expected 344,000 MT in the current year. September export volumes remained flat year-over-year at 14,511 MT, offering no relief to the supply picture.

The Bigger Picture: From Deficit to Modest Surplus

Putting current developments into historical context underscores the magnitude of the supply rebalancing. In May, ICCO reported a 2023/24 global cocoa deficit of -494,000 MT—the largest shortfall in over 60 years—driven by production that fell 12.9% year-over-year to 4.368 MMT. The recovery to a 49,000 MT surplus in 2024/25 (up 7.4% year-over-year to 4.69 MMT) represents the first surplus in four years, yet margins remain razor-thin, leaving cocoa vulnerable to any supply disruption.

A delayed European Union deforestation regulation (EUDR), approved by the European Parliament on November 26 for a one-year postponement, provided temporary relief by keeping agricultural import channels open from deforestation-prone regions. However, this reprieve is temporary and does not address the structural supply tightness that cocoa markets are currently navigating.