Tepid Cocoa Demand Meets Record Supplies, Sending Prices to Multi-Year Lows

Cocoa futures markets are experiencing sustained downward pressure as tepid global demand collides with abundant inventory levels. March ICE New York cocoa fell 42 points (-1.16%) and March ICE London cocoa dropped 30 points (-1.15%), continuing a month-long decline that has pushed New York contracts to their lowest level in 2.25 years and London cocoa to a 2.5-year bottom. This market downturn reflects a fundamental imbalance between oversupply and flagging consumer interest in chocolate products.

Weak Consumer Appetite Slams Chocolate and Cocoa Demand

The cocoa market’s struggle stems largely from tepid demand across major consumer regions. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported a 22% decline in cocoa division sales volume for the quarter ending November 30, citing “negative market demand and a prioritization of volume toward higher-return segments within cocoa.” This pullback reflects consumers’ hesitation to purchase chocolate products amid elevated retail prices.

Grinding reports from major cocoa-consuming regions reveal the breadth of demand weakness. The European Cocoa Association reported that Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 MT—a sharper decline than expected and the lowest quarterly figure in twelve years. Asian grinding activity similarly disappointed, with Q4 Asian cocoa grindings declining 4.8% year-over-year to 197,022 MT. North American grindings showed minimal growth, rising only 0.3% year-over-year to 103,117 MT, indicating tepid demand across the world’s primary chocolate manufacturing centers.

Ample Global Reserves and Exchange Stockpiles Flood the Market

The abundance of available cocoa supplies exacerbates the demand problem. The International Cocoa Organization (ICCO) reported on January 23 that global cocoa stocks rose 4.2% year-over-year to 1.1 million metric tons, adding to downside pressure. More immediately, ICE-monitored cocoa inventories climbed to a four-month high of 1,899,988 bags on a recent Thursday, signaling excess supply on regulated exchanges.

StoneX’s January 29 forecast projects particularly large surpluses ahead. The firm forecasted a global cocoa surplus of 287,000 MT for the 2025/26 season and 267,000 MT for 2026/27, compared with a much tighter surplus of 49,000 MT anticipated for 2024/25. These expanding surpluses underscore how dramatically the market has shifted from the historical deficits experienced in 2023/24, when ICCO reported a deficit of 494,000 MT—the largest in over 60 years.

Rising Exports and Favorable Harvests Extend Supply Pressure

Nigeria, the world’s fifth-largest cocoa producer, is contributing to global oversupply through higher export activity. According to Bloomberg, Nigerian December cocoa exports rose 17% year-over-year to 54,799 MT, increasing the flow of cocoa into global markets despite tepid demand conditions.

Conversely, one supportive factor for prices has emerged from Ivory Coast shipments. Cumulative data through February 8, 2026 showed that Ivory Coast farmers shipped 1.27 million metric tons of cocoa to ports during the current marketing year (October 1, 2025 through February 8, 2026), down 3.8% from 1.32 million metric tons in the comparable year-ago period. This slowdown in deliveries from the world’s largest cocoa producer provides a modest price support.

However, favorable growing conditions in West Africa remain a headwind for prices. Tropical General Investments Group recently noted that favorable weather is expected to boost the February-March cocoa harvest in Ivory Coast and Ghana, with farmers reporting larger and healthier pods compared to the prior year. Mondelez reported that the latest cocoa pod count in West Africa is 7% above the five-year average and “materially higher” than last year’s crop, signaling a robust harvest ahead.

Long-Term Outlook Shows Mixed Signals for Price Recovery

While near-term dynamics favor lower prices given tepid demand and plentiful supplies, the medium-term supply outlook contains some supportive elements. Nigeria’s Cocoa Association projects that Nigerian cocoa production in 2025/26 will decline 11% year-over-year to 305,000 MT, down from a projected 344,000 MT in 2024/25. This production decline could help tighten supply conditions.

Additionally, ICCO’s revised forecasts suggest the surplus cycle may be moderating. On November 28, ICCO cut its 2024/25 global cocoa surplus estimate to 49,000 MT from a previous 142,000 MT estimate and lowered its 2024/25 production estimate to 4.69 million metric tons from 4.84 million metric tons. Rabobank similarly trimmed its 2025/26 surplus forecast to 250,000 MT from a November projection of 328,000 MT.

The cocoa market currently faces headwinds from tepid consumer demand meeting abundant global supplies. Price recovery will likely depend on whether demand strengthens as retail chocolate prices stabilize, or whether the combination of record exchange inventories and favorable harvests extends the current downtrend further. Market participants should monitor demand indicators and inventory levels closely in the coming weeks.