Cocoa Market Under Siege: Barchart's Analysis of Supply Glut and Demand Crisis

Recent trading sessions have painted a bleak picture for cocoa investors, with prices sliding toward multi-year lows amid a complex interplay of oversupply and collapsing consumer demand. According to Barchart’s commodity analysis, the cocoa futures market is grappling with fundamental headwinds that show no immediate signs of abating. March ICE NY cocoa slipped to a 2.25-year low, while London cocoa touched a 2.5-year nadir, signaling sustained selling pressure across both major trading venues.

Price Collapse Accelerates as Cocoa Futures Hit Multi-Year Lows

The downward momentum in cocoa has been relentless, with prices extending a month-long decline through recent trading. March NY cocoa (CCH26) dropped 12 points (-0.29%) while London cocoa #7 (CAH26) fell 1 point (-0.03%), continuing a bearish trend that reflects deteriorating market fundamentals. The velocity of these declines—touching the lowest levels in over two years—underscores the severity of imbalances now gripping global cocoa markets.

Global Cocoa Surplus Expands While Demand Indicators Flash Red

The structural challenge facing cocoa prices stems from a widening supply glut. Forecasting firm StoneX projects a substantial global cocoa surplus of 287,000 metric tons for the 2025/26 season, with an additional 267,000 MT surplus anticipated for 2026/27. These projections reveal an increasingly oversupplied market unlikely to rebalance in the near term. The International Cocoa Organization (ICCO) compounds these concerns, reporting that worldwide cocoa stocks surged 4.2% year-over-year to 1.1 million metric tons—a level that pressures prices and signals ample supply availability.

Chocolate Makers Are Cutting Orders as Consumer Resistance Mounts

Demand-side weakness has emerged as a primary culprit in cocoa’s malaise. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, disclosed a startling 22% decline in cocoa division sales volume for its quarter ending November 30. The company explicitly cited “negative market demand and a prioritization of volume toward higher-return segments,” revealing that sky-high cocoa prices have priced out consumers willing to purchase chocolate products at premium levels. This demand destruction extends across major processing regions: European cocoa grindings fell 8.3% year-over-year to 304,470 MT in Q4—the steepest decline for a fourth quarter in twelve years and materially worse than the 2.9% decline that analysts had anticipated.

Asian cocoa grindings similarly contracted 4.8% year-over-year to 197,022 MT in Q4, while North American grindings barely held ground with a meager 0.3% year-over-year increase to 103,117 MT. These weakness markers across all three major chocolate-grinding regions provide compelling evidence that elevated cocoa prices have successfully destroyed demand among end consumers.

West African Harvest Boost and Swelling Inventories Add to Price Headwinds

Paradoxically, while demand withers, supply-side dynamics are becoming more abundant. Tropical General Investments Group flagged favorable growing conditions in West Africa that are expected to amplify cocoa harvests in February and March across the Ivory Coast and Ghana, as farmers report notably larger and healthier cocoa pods compared to the year-prior period. Chocolate manufacturer Mondelez recently noted that the latest pod count in West Africa sits 7% above the five-year average, suggesting a substantially more robust harvest than last season.

Simultaneously, ICE cocoa inventories warehoused at U.S. ports have rebounded dramatically from a December low of 1,626,105 bags to a 2.5-month high of 1,775,219 bags—a technical bearish signal that weighs on futures prices and suggests ample near-term supply availability. This inventory rebound, combined with anticipated harvest strength, extends bearish pressure on cocoa valuations.

Regional Supply Dynamics: Ivory Coast Reluctance vs. Nigerian Weakness

The supply picture becomes more nuanced when examining individual producing regions. The Ivory Coast, the world’s largest cocoa supplier, has moderated its shipments to ports; cumulative data through January 25, 2026 show 1.20 million MT shipped during the current marketing year, down 3.2% compared to 1.24 million MT in the same period a year ago. This modest restraint reflects farmer reluctance to forward supplies at depressed price levels—a classic supply-withholding response to low prices.

Nigeria presents a contrasting dynamic. As the world’s fifth-largest cocoa producer, Nigeria’s November exports contracted 7% year-over-year to 35,203 MT. More significantly, Nigeria’s Cocoa Association projects that the country’s 2025/26 cocoa production will plummet 11% year-over-year to just 305,000 MT from a prior-year estimate of 344,000 MT. Smaller Nigerian supplies provide some underlying support for cocoa prices, yet remain insufficient to offset the broader supply glut from other producing regions.

Mixed Signals: Modest Support from Tighter Supply Forecasts

Not all recent developments have reinforced downside pressure. The International Cocoa Organization substantially revised its 2024/25 global cocoa surplus estimate down to 49,000 MT from a prior 142,000 MT projection—a meaningful reduction that hints at tightening supply balances ahead. ICCO also lowered its 2024/25 global cocoa production estimate to 4.69 million MT from 4.84 million MT, though current production remains elevated relative to historical norms.

Similarly, Rabobank pared back its 2025/26 cocoa surplus forecast to 250,000 MT from an earlier estimate of 328,000 MT, signaling that supply-demand rebalancing may accelerate if current production trends persist. These upward revisions to tightness serve as modest counterweight to the prevailing bearish sentiment, though they offer insufficient support to reverse the pronounced downtrend now dominating cocoa futures markets. According to Barchart’s ongoing commodity surveillance, near-term price stabilization remains elusive until demand indicators show renewed signs of life.