West Africa Supply Crunch Sends Cocoa Pod Markets Soaring to Two-Week Peaks

The cocoa market just witnessed a sharp rally as supply concerns intensify across West Africa. March ICE NY cocoa climbed +289 points (+4.85%) while London’s March contract jumped +276 points (+6.55%), hitting 2-week highs. What’s driving this sudden surge? The answer lies in the Ivory Coast—the world’s largest cocoa producer—where port arrivals have hit a significant slowdown.

Supply Tightening: The Core Driver

Ivory Coast farmers delivered only 59,708 MT of cocoa to ports for the week ending December 28, representing a sharp -27% decline compared to the same week last year. Looking at the broader picture, cumulative shipments for the new marketing year (October 1 through December 28) reached just 1.029 MMT, down -2.0% from 1.050 MMT in the previous year.

This supply contraction is stoking real concerns about cocoa availability. The global market is recalibrating expectations as Ivory Coast production faces headwinds. Inventory levels are also tightening—ICE-monitored cocoa stocks held at US ports recently fell to a 9.5-month low of 1,626,105 bags last Friday, adding another layer of support to prices.

Index Inclusion Could Amplify the Rally

Beyond physical supply dynamics, financial flows are positioning cocoa for further strength. Cocoa futures are set to enter the Bloomberg Commodity Index (BCOM) starting in January, a development that Citigroup estimates could trigger as much as $2 billion in index-related buying of NY cocoa futures. This structural shift is attracting fresh capital to the market.

Demand Weakness Offers Some Headwind

Not all signals are bullish. Global cocoa grinding data tells a concerning story about demand. Asia’s Q3 cocoa grindings plummeted -17% year-over-year to 183,413 MT—the smallest quarterly grind in 9 years, according to the Cocoa Association of Asia. Europe painted an equally grim picture, with Q3 grindings falling -4.8% y/y to 337,353 MT, marking the lowest third-quarter level in a decade.

North America provided a slight exception: Q3 grindings rose +3.2% y/y to 112,784 MT, though new reporting companies distorted the underlying trend. These metrics suggest chocolate manufacturers are operating cautiously amid economic uncertainty.

Supply Outlook: ICCO Dramatically Revises Lower

The International Cocoa Organization’s (ICCO) latest projections underscore how dramatically the supply picture has shifted. On December 19, ICCO estimated the 2024/25 global cocoa surplus at just 49,000 MT—a stunning revision downward from an earlier forecast of 142,000 MT. The organization also trimmed its 2024/25 global cocoa production estimate to 4.69 MMT from 4.84 MMT previously.

Rabobank reinforced this tightening bias, cutting its 2025/26 global cocoa surplus projection to 250,000 MT from November’s 328,000 MT forecast. These downgrades reflect a structural shift: ICCO noted that global cocoa production in 2024/25 rose +7.4% y/y to 4.69 MMT, marking a rebound from years of deficit, yet supply remains constrained relative to demand expectations.

Weather and Crop Conditions: A Mixed Picture

Favorable West African weather is providing some offsetting pressure. Ivory Coast farmers report that a combination of rain and sunshine is promoting robust cocoa tree bloom, while Ghana’s regular rainfall has supported cocoa tree and pod development ahead of the harmattan season. Chocolate maker Mondelez noted that the current cocoa pod count in West Africa stands 7% above the five-year average and materially exceeds last year’s crop level.

The main crop harvest has commenced with farmer optimism about quality, suggesting ample supplies are on the horizon. However, this seasonal reprieve hasn’t prevented the rally, indicating market participants are pricing in longer-term structural tightness.

Nigeria’s Production Decline: Additional Upside Support

Nigeria, the world’s fifth-largest cocoa producer, is adding to supply concerns. Nigeria’s Cocoa Association projects that 2025/26 production will contract -11% y/y to 305,000 MT, down from 344,000 MT expected for 2024/25. September cocoa exports remained flat year-over-year at 14,511 MT, offering no relief to global supply dynamics.

The Bottom Line

Cocoa prices are catching bids across multiple fronts: slowing arrivals in Ivory Coast, declining global inventories, structural index demand ahead, and production headwinds in Nigeria. While weak grinding demand and favorable weather inject some caution, the supply-side calculus is clearly winning the near-term argument. The move to 2-week highs appears justified by the fundamentals.