West African Cocoa Supplies Expected to Remain Adequate, Pressuring Near-Term Prices

Cocoa futures took a breather on Thursday as market sentiment shifted toward ample global supplies. ICE NY cocoa March contract (CCH26) dropped 44 points (-0.74%), while London cocoa #7 fell 24 points (-0.55%), marking cocoa’s decline to a one-week low.

Supply Outlook Turns Constructive for Buyers

The bearish pressure stems primarily from improving supply prospects across West Africa. Favorable weather patterns in Ivory Coast and Ghana are accelerating pod development and boosting farmer optimism ahead of the main harvest. Chocolate manufacturer Mondelez reported that current cocoa pod counts in the region stand 7% above the five-year average, signaling adequate inventories will likely materialize through the 2025/26 season.

Ivory Coast farmers have already begun shipping substantial volumes to ports—895,544 MT arrived through mid-December, representing a 0.2% increase year-over-year. As the world’s largest cocoa producer, the nation’s strong port activity underscores the expectation of sufficient supplies to meet global demand.

Inventory Dynamics Send Mixed Signals

Not all signals point downward. ICE-monitored cocoa inventories at US ports compressed to a nine-month low of 1,642,801 bags on Thursday, providing some technical support. Additionally, Citigroup recently cut its 2025/26 global cocoa surplus estimate to 79,000 MT from 134,000 MT, implying tighter balances than previously anticipated.

Demand Weakness Adds to Downside Pressure

Concurrent demand concerns are undermining price floors. Global cocoa grindings—a key demand proxy—painted a gloomy picture in Q3: Asia grindings fell 17% year-over-year to 183,413 MT (the smallest in nine years), while European grindings declined 4.8% to 337,353 MT (lowest in a decade). North American chocolate candy sales volumes sank more than 21% in the thirteen weeks through September 7.

Policy Shifts and Index Inclusion Offer Price Support

A December 26 European Parliament decision to delay the deforestation regulation (EUDR) by one year removed near-term supply disruption risks, keeping prices subdued. However, offsetting this headwind is NY cocoa’s pending inclusion in the Bloomberg Commodity Index (BCOM) beginning January, which could attract $2 billion in passive fund inflows during the first week of trading.

Production Headwinds Beyond West Africa

Nigeria’s projected 11% production decline to 305,000 MT for 2025/26 does support the longer-term bullish narrative, but near-term adequate supplies from Ivory Coast and Ghana continue to dominate price action. The market remains caught between adequate near-term availability and structural production challenges ahead.