Cocoa Market Faces Demand Challenges Amid Record Supply Overload

The global cocoa market is experiencing significant downward pressure as weakening demand collides with abundant supply levels. Consumers are increasingly reluctant to purchase chocolate products at elevated price points, fundamentally reshaping the demand landscape for cocoa. This structural shift in market demand, combined with oversupply conditions, has pushed cocoa futures to multi-year lows, marking a dramatic reversal from the deficit environment that characterized prior seasons.

Market Demand Weakens as Chocolate Consumers Resist High Prices

Demand for cocoa has deteriorated notably across major consumer regions. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported a 22% decline in sales volume within its cocoa division for the quarter ending November 30, explicitly attributing the contraction to “negative market demand and a prioritization of volume toward higher-return segments within cocoa.” This demand destruction at the production level signals broader consumer resistance to chocolate pricing.

Regional grinding reports corroborate the demand weakness. The European Cocoa Association reported that Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 metric tons, substantially worse than the anticipated 2.9% decline and marking the weakest fourth quarter performance in 12 years. Asian demand also softened, with the Cocoa Association of Asia reporting Q4 Asian cocoa grindings declined 4.8% year-over-year to 197,022 MT. In North America, the National Confectioners Association reported Q4 cocoa grindings rose only 0.3% year-over-year to 103,117 MT, reflecting demand stagnation rather than growth.

Global Supply Surplus Deepens Pressure on Cocoa Futures

The intersection of weakening demand with rising supplies has created oversupply conditions. StoneX forecasted a global cocoa surplus of 287,000 MT for the 2025/26 season and 267,000 MT for 2026/27, indicating persistent structural imbalance. The International Cocoa Organization reported that global cocoa stocks increased 4.2% year-over-year to 1.1 million metric tons, adding to inventory pressures.

Cocoa futures prices extended their month-long decline in recent trading. March ICE New York cocoa closed down 12 points, representing a 0.29% loss, while March ICE London cocoa closed down 1 point, or 0.03%. New York cocoa posted a 2.25-year nearest-futures low, and London cocoa marked a 2.5-year nearest-futures low, reflecting the cumulative weight of oversupply and demand headwinds. The repricing lower represents a stark contrast to the deficit environment documented in prior marketing years.

Growing Inventories and Import Accumulation Signal Extended Weakness

ICE-monitored cocoa inventories held in U.S. ports have rebounded following a 10.5-month low of 1,626,105 bags recorded on December 26. Inventories climbed to a 2.5-month high of 1,775,219 bags, a bearish development for price support. The inventory accumulation reflects the imbalance between supply flows and demand absorption, creating a drag on prices as importers face mounting stocks.

West African Harvest Forecasts Point to Extended Oversupply

Favorable growing conditions in West Africa threaten to exacerbate the oversupply situation. Tropical General Investments Group indicated that beneficial weather patterns are expected to boost the February-March cocoa harvest in the Ivory Coast and Ghana, with farmers reporting larger and healthier pods compared with the prior year. Chocolate manufacturer Mondelez noted that the latest cocoa pod count in West Africa stands 7% above the five-year average and is materially higher than last year’s crop, signaling substantial production potential.

The Ivory Coast, the world’s largest cocoa producer, has already commenced harvest of its main crop, and farmers remain optimistic regarding crop quality. However, elevated stocks coupled with lower prices have prompted farmers to moderate supply flows. Data through January 25, 2026 showed that Ivory Coast farmers shipped 1.20 million metric tons of cocoa to ports in the current marketing year, down 3.2% from 1.24 million metric tons in the comparable prior year period.

Producer Concerns Keep Cocoa Prices Supported Despite Headwinds

Limited production from secondary producing regions offers modest price support. Nigeria, the world’s fifth-largest cocoa producer, exported only 35,203 MT in November, down 7% year-over-year. Nigeria’s Cocoa Association projects that Nigeria’s 2025/26 cocoa production will decline 11% year-over-year to 305,000 MT from an anticipated 344,000 MT for the 2024/25 crop year. This production contraction in a key supply region provides some underlying support for cocoa prices despite broader oversupply conditions.

A gradual tightening in global supply prospects offers long-term support for the market. The International Cocoa Organization initially cut its 2024/25 global cocoa surplus estimate to 49,000 MT from a prior estimate of 142,000 MT and lowered 2024/25 production estimates to 4.69 million metric tons from 4.84 million metric tons previously. Rabobank reduced its 2025/26 global surplus forecast to 250,000 MT from a November estimate of 328,000 MT, suggesting moderation in near-term oversupply conditions.

The current pricing environment reflects the transition from a historic deficit period. The ICCO had previously documented a 2023/24 global cocoa deficit of 494,000 MT, the largest shortfall in over 60 years, with production declining 12.9% year-over-year to 4.368 million metric tons. The 2024/25 season marked a recovery, with ICCO estimating a 49,000 MT surplus—the first surplus in four years—and estimating global cocoa production rose 7.4% year-over-year to 4.69 million metric tons. The current period’s supply abundance and weakening demand represent a fundamental market repricing following years of scarcity.