West African Cocoa Supply Tightens While Global Demand Signals Weaken

Cocoa futures showed mixed results today, with March ICE NY cocoa ([CCH26]( gaining +43 points (+0.83%), while December ICE London cocoa ([CAZ25]( declined -78 points (-2.06%). The commodity bounced back from 1.75-year lows driven by fresh concerns over supply constraints from the world’s leading producer.

Supply Pressures Mount in Ivory Coast

Recent shipment data from the Ivory Coast revealed tighter-than-expected logistics during the current marketing year. Through November 23, Ivory Coast farmers delivered 618,899 MT of cocoa to ports—a 3.7% decline compared to 642,500 MT during the same window last year. As the largest global cocoa producer, any slowdown in the Ivory Coast’s export pipeline immediately captures market attention, prompting buying interest that temporarily lifted New York futures into positive territory.

The timing in Ivory Coast’s harvest cycle remains critical for global supply expectations. With the main crop harvest only recently underway, initial farmer sentiment appears optimistic regarding crop quality, though actual volumes will prove decisive for price direction.

Regulatory Relief Eases Near-Term Supply Anxiety

Last Wednesday’s announcement that EU nations are postponing the Deforestation Regulation (EUDR) for one year provided temporary price support. The EUDR framework had been designed to restrict imports of agricultural commodities—including cocoa—from deforestation-prone regions in Africa, Indonesia, and Southeast Asia. By delaying implementation, EU import restrictions on cocoa from these regions will remain suspended, easing immediate concerns about supply disruptions.

However, this regulatory breathing room competes against fundamental demand weakness that continues to dominate market sentiment.

Demand Weakness Weighs Heavily on Cocoa

Chocolate manufacturers and processors are signaling reduced purchasing appetite across all major regions. Hershey’s CEO disclosed that Halloween chocolate sales disappointed this year, despite the holiday accounting for nearly 18% of annual US candy sales. Research firm Circana reported that North American chocolate candy sales volume contracted more than 21% in the 13-week period ending September 7 versus the prior year.

Processing activity reinforces sluggish demand:

• Q3 Asian cocoa grindings fell 17% year-over-year to 183,413 MT—the weakest third quarter in 9 years
• Q3 European cocoa grindings declined 4.8% year-over-year to 337,353 MT—the lowest third quarter in 10 years
• Q3 North American cocoa grindings rose 3.2% to 112,784 MT, though this figure was distorted by new reporting company additions

Abundant Supply Outlook Pressures Prices

West African weather has proven favorable for cocoa pod development. Cocoa farmers in the Ivory Coast report healthy tree conditions with sufficient dry periods to cure harvested beans properly. Ghana’s farmers similarly benefited from favorable weather patterns accelerating pod maturation. Chocolate maker Mondelez noted that current West African cocoa pod counts stand 7% above the five-year average and “materially higher” than last year’s harvest.

Additionally, tariff relief announced by the Trump administration on November 14—specifically the removal of 10% reciprocal tariffs on non-US-grown commodities including cocoa—reduced short-term supply concerns.

Structural Concerns About Global Cocoa Balance

The International Cocoa Organization (ICCO) highlighted persistent structural challenges. For 2023/24, global cocoa production plummeted 13.1% year-over-year to 4.380 MMT, creating a deficit of 494,000 MT—the largest in over 60 years. The global stocks-to-grindings ratio compressed to a 46-year low of 27.0%.

Improvement materialized in 2024/25, with ICCO projecting a global surplus of 142,000 MT (the first in four years) based on estimated production growth of 7.8% year-over-year to 4.84 MMT.

Offsetting Bullish Factor: Nigeria’s Declining Output

Supply relief in one region faces headwinds from production cuts elsewhere. Nigeria’s Cocoa Association projects that 2025/26 cocoa production will slide 11% year-over-year to 305,000 MT, down from an estimated 344,000 MT in the current 2024/25 crop year. Nigeria ranks as the world’s fifth-largest cocoa producer, making this decline material to global supply calculations. September cocoa exports from Nigeria remained flat year-over-year at 14,511 MT.

Storage Inventories Tighten Supportively

One structural positive for prices: ICE-monitored cocoa inventories stored at US ports fell to an 8.25-month low of 1,733,345 bags last Friday, providing underlying support to the futures complex despite demand headwinds.

Cocoa prices remain caught between conflicting signals—modest supply disruptions in key producing regions contrast sharply against pronounced weakness in global chocolate demand and near-term production surpluses.