Cocoa Market Faces Pressure from Robust Supply Surge and Demand Slump

Recent trading sessions have pushed cocoa prices lower, with May ICE NY cocoa closing down 2.36% and March ICE London cocoa dropping 3.45%, as the market grapples with robust supply levels that far outpace consumption. While prices remain above recent 2.75-year lows, the underlying dynamics suggest continued downward pressure as international buyers resist paying inflated official farm-gate prices in the Ivory Coast and Ghana—prices that far exceed current international benchmarks.

The disconnect between official pricing and world market rates is creating a supply buildup that challenges the entire value chain. ICE cocoa inventories surged to a 5.25-month high of 2,111,554 bags as the reluctance to purchase at official prices keeps cocoa flowing into storage rather than to buyers. This inventory accumulation reflects deeper structural imbalances in the market.

Prices Fall as Cocoa Stockpiles Reach Five-Month Peak

The inventory spike comes amid aggressive pricing adjustments by major producing nations. Ghana cut the official price it pays cocoa farmers by nearly 30% for the 2025/26 growing season, while the Ivory Coast announced it was considering a 35% reduction for mid-crop harvests beginning in April. These moves underscore just how misaligned official and market prices have become. The Ivory Coast and Ghana collectively produce more than half of the world’s cocoa, making their pricing decisions crucial to global supply dynamics.

The broader picture shows cocoa caught in a seven-week downtrend. StoneX forecasted a global cocoa surplus of 287,000 MT for 2025/26, while projecting a 267,000 MT surplus for 2026/27. The International Cocoa Organization reported that global cocoa stocks rose 4.2% year-over-year to 1.1 MMT, painting a picture of ample supplies pressing against market capacity.

Demand Crisis Weighs on Global Cocoa Grinding

Perhaps the most telling sign of market stress is the collapse in demand across major consuming regions. Consumers continue to resist high chocolate prices, and this price sensitivity is translating into reduced cocoa purchases throughout the supply chain. Barry Callebaut AG, the world’s largest bulk chocolate maker, reported a stunning 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.”

Grinding reports from cocoa processors tell a similar story. The European Cocoa Association reported that Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 MT—not only worse than expectations of 2.9% decline but also the lowest for any Q4 in 12 years. Asian cocoa grindings also weakened, with Q4 figures falling 4.8% year-over-year to 197,022 MT according to the Cocoa Association of Asia. North American grindings provided little relief, rising just 0.3% year-over-year to 103,117 MT.

Robust Production Forecasts Adding to Oversupply Picture

On the supply side, favorable growing conditions in West Africa are setting the stage for robust harvests despite production cuts expected in some nations. Tropical General Investments Group noted that ideal weather conditions in the Ivory Coast and Ghana are expected to boost February-March harvests, with farmers reporting larger and healthier cocoa pods compared to the prior year. Mondelez reported that the latest cocoa pod counts in West Africa are 7% above the five-year average and “materially higher” than last year’s crop, suggesting quality may be competitive even as overall output moderates.

Ivory Coast farmers have already begun harvesting the main crop with optimism about quality levels. However, official production projections suggest some moderation ahead. The Ivory Coast projects cocoa production in 2025/26 will fall 10.8% year-over-year to 1.65 MMT from 1.85 MMT in 2024/25.

Mixed Signals in Cocoa Exports and Future Output

Nigeria, the world’s fifth-largest cocoa producer, is adding to supply pressures with higher export volumes. Nigerian December cocoa exports rose 17% year-over-year to 54,799 MT, demonstrating that higher-cost producers are still rushing cocoa to market. Yet Nigeria’s own production outlook is weakening—the Cocoa Association of Nigeria projects that 2025/26 cocoa production will fall 11% year-over-year to 305,000 MT from a projected 344,000 MT in 2024/25.

Meanwhile, cumulative cocoa deliveries to Ivory Coast ports in the current marketing year (October 1, 2025, through February 22, 2026) totaled 1.31 MMT, down 3.7% from 1.36 MMT in the same period a year ago, suggesting that the pace of offtake from farmers is gradually moderating. On a broader note, the International Cocoa Organization estimated a 2024/25 global cocoa surplus of 49,000 MT—the first surplus in four years—and reported that global cocoa production in 2024/25 rose 7.4% year-over-year to 4.69 MMT.

Recent forecasting adjustments underscore the supply abundance. Rabobank cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT, yet this still represents a robust surplus that will continue to weigh on prices as demand remains tepid and robust production supplies the market with more cocoa than consumers want at current pricing levels.