Cocoa Market Faces Tepid Demand Amid Rising Stockpiles and Supply Growth

Cocoa futures are under intense selling pressure in early March 2026, with both major contracts retreating sharply. March NY cocoa (CCH26) dropped 102 points, or 2.43%, while March London cocoa (CAH26) fell 103 points, representing a 3.38% decline. The market weakness reflects a fundamental disconnect between abundant global supplies and increasingly tepid demand from chocolate manufacturers and consumers worldwide.

Price Collapse Accelerates Bearish Momentum

The recent selloff represents a continuation of cocoa’s downtrend that intensified in late January. On January 30, New York cocoa hit a 2.25-year low while London cocoa touched a 2.5-year trough, as market participants grappled with the reality of oversupply and cooling consumption. The current decline underscores how quickly sentiment has shifted from late 2024’s supply-squeeze narrative to a more bearish outlook dominated by glut concerns and weakening end-user appetite.

Chocolate Makers Signal Demand Erosion

The weakness in cocoa demand stems directly from consumer resistance to elevated chocolate prices. Barry Callebaut AG, the world’s largest cocoa processor and chocolate manufacturer, reported a startling -22% plunge in cocoa division sales volume for the quarter ending November 30. The company explicitly cited “negative market demand” and a strategic shift toward higher-margin products outside the cocoa segment. This signals that price transmission to consumers has damaged volume demand beyond what many expected.

Grinding data from major cocoa-consuming regions corroborates this demand deterioration. The European Cocoa Association reported Q4 European grindings fell -8.3% year-over-year to 304,470 MT—a steeper decline than the anticipated -2.9% and the weakest Q4 in 12 years. Asian grindings also softened, with the Cocoa Association of Asia reporting a -4.8% y/y decline to 197,022 MT in the same quarter. North America showed near-zero growth, with Q4 grindings rising just +0.3% to 103,117 MT. These tepid trends across all three major cocoa-grinding regions paint a picture of synchronized demand weakness that provides little optimism for price recovery.

Surplus Outlook Overwhelms Market Sentiment

Global cocoa surpluses are expected to remain substantial through the 2026/27 season, weighing heavily on prices. StoneX recently projected a global cocoa surplus of 287,000 MT for 2025/26, followed by a 267,000 MT surplus in 2026/27. This represents a structural shift from the acute deficits experienced in 2023/24, when production fell 12.9% year-over-year to just 4.368 MMT. By contrast, the International Cocoa Organization (ICCO) estimated 2024/25 global production at 4.69 MMT—a +7.4% rebound—marking the first surplus year in four years with 49,000 MT of excess supply.

Inventory Buildup Reinforces Downside Pressure

The rapid accumulation of cocoa stocks at ICE warehouses has become a focal point for bearish traders. ICE-monitored cocoa inventories surged to a 1.5-year peak of 2,966,214 bags last Thursday, signaling ample supply availability and removing any urgency from buyers. Simultaneously, global cocoa stocks reported by the ICCO rose 4.2% year-over-year to 1.1 million metric tons, reflecting the inability of demand to absorb current production flows.

West African Harvest Prospects Extend Supply Concerns

Favorable growing conditions across West Africa are expected to boost upcoming harvests and extend the surplus outlook. Tropical General Investments Group noted that healthy weather patterns in the Ivory Coast and Ghana should support larger pod yields in the February-March harvest period. Mondelez added that the current cocoa pod count in West Africa is 7% above the five-year average and “materially higher” than the prior-year crop, suggesting robust output ahead. The Ivory Coast, which accounts for roughly one-third of global cocoa supply, has already commenced its main crop harvest with farmer sentiment optimistic about quality and volumes.

Nigeria’s Production Shortfall Offers Modest Support

A bright spot in the supply narrative comes from Nigeria, the world’s fifth-largest cocoa producer, where output faces structural headwinds. Nigeria’s November cocoa exports dropped -7% year-over-year to 35,203 MT, and the Nigerian Cocoa Association projects the 2025/26 crop will fall -11% to 305,000 MT from the prior year’s 344,000 MT estimate. While this production shortfall provides minor support to prices, the deficit is insufficient to offset surpluses elsewhere and the persistent tepid demand environment.

Market Outlook Hinges on Demand Recovery

With abundant supplies locked in for multiple years and tepid consumption patterns persisting across chocolate manufacturers, cocoa prices face a challenging backdrop. Support may only emerge if genuine demand recovery takes hold—a development that requires chocolate prices to fall enough to stimulate volume consumption or for cost pressures on manufacturers to relent. Until such catalysts materialize, the market appears positioned to drift lower.