Cocoa Prices Climb as Supplies Tighten From Ivory Coast

Cocoa futures staged a notable recovery on Tuesday, with March contracts in New York and London both posting solid gains. The rebound reflects a fundamental shift in market dynamics, as slowing deliveries from the world’s largest cocoa-producing nation have triggered technical short-covering while simultaneously highlighting tighter near-term supply prospects.

Short-Covering Drives Tuesday’s Recovery

March ICE New York cocoa closed up 90 points (+2.14%), while March ICE London cocoa #7 added 91 points (+3.04%). This marks the second consecutive session of gains for the commodity. The rally was catalyzed by cumulative data showing that Ivory Coast farmers shipped only 1.23 million metric tons to ports during the current marketing year (October 1, 2025 through February 1, 2026), a decline of 4.7% compared to 1.24 million metric tons in the equivalent period last year. As traders rushed to cover short positions, cocoa prices began to climb back from recently depressed levels, offering a temporary counterweight to the broader bearish sentiment that has gripped markets since late Friday.

Demand Concerns Weigh on the Commodity

Despite Tuesday’s bounce, headwinds continue to challenge the cocoa market. Last week, the commodity hit a 2.25-year low in New York and a 2.5-year low in London as consumers remain reluctant to purchase chocolate at elevated price points. Barry Callebaut AG, the world’s leading bulk chocolate manufacturer, reported a 22% decline in sales volume within its cocoa division for the quarter ending November 30, attributing the drop to “negative market demand and a prioritization of volume toward higher-return segments.”

This demand weakness extends across global grinding hubs. The European Cocoa Association reported that fourth-quarter cocoa grindings in Europe declined 8.3% year-over-year to 304,470 metric tons—significantly worse than the anticipated 2.9% decline and marking the lowest quarterly output for Q4 in twelve years. Asian grindings also softened, falling 4.8% year-over-year to 197,022 metric tons in the fourth quarter. North America presented a more resilient picture but offered limited support, with grindings rising just 0.3% year-over-year to 103,117 metric tons.

Global Surplus Forecasts Limit Upside

The backdrop of abundant global supplies continues to constrain cocoa price appreciation. StoneX projects a global cocoa surplus of 287,000 metric tons for the 2025/26 season, while Rabobank recently trimmed its surplus forecast to 250,000 metric tons from 328,000 metric tons previously estimated. The International Cocoa Organization (ICCO) reported in January that global cocoa stocks increased 4.2% year-over-year to 1.1 million metric tons, further illustrating the oversupply dynamic.

However, these forecasts mark a significant turnaround from the prior severe shortage. ICCO data revealed that 2023/24 saw a global cocoa deficit of 494,000 metric tons—the largest shortfall in over 60 years—before production rebounded in 2024/25. That year posted the first surplus in four years at 49,000 metric tons as global cocoa production rose 7.4% year-over-year to 4.69 million metric tons.

US Inventory Levels and Supply Tightening

Cocoa inventories held in US ports have climbed from a 10.5-month low of 1,626,105 bags registered on December 26, reaching a 2.5-month high of 1,782,921 bags by Tuesday—a bearish development for price momentum. Yet favorable growing conditions in West Africa are expected to support the February-March harvest, which could either exacerbate the oversupply picture or validate forecasts of tightening supply trajectories.

Mondelez recently disclosed that the latest cocoa pod count in West Africa stands 7% above the five-year average and materially higher than the prior-year crop, signaling robust harvests ahead. Tropical General Investments Group similarly noted that larger and healthier pods are being reported by farmers in the Ivory Coast and Ghana compared to the same period one year ago.

Nigeria’s Declining Output Provides Modest Support

One bright spot for cocoa bulls is the projected contraction in output from Nigeria, the world’s fifth-largest cocoa producer. Nigeria’s Cocoa Association forecasts that 2025/26 production will fall 11% year-over-year to 305,000 metric tons from a projected 344,000 metric tons in 2024/25. November exports from Nigeria dropped 7% year-over-year to 35,203 metric tons, reinforcing expectations of tightening supplies from this key producing nation.

Outlook: Mixed Signals Shape the Road Ahead

Cocoa prices continue to climb and descend amid conflicting signals. While slowing deliveries from Ivory Coast and production declines in Nigeria offer technical support, the combination of abundant global inventories, persistent demand weakness, and favorable West African growing conditions creates a complex environment. Market participants face a delicate equilibrium: near-term supply tightness competing against longer-term surplus expectations and subdued consumption patterns. The sustainability of Tuesday’s gains will depend on whether the supply-side discipline evidenced by slowing deliveries can overcome the demand pressures and inventory headwinds that have defined the commodity’s trajectory through early 2026.