Cocoa Prices Slump as Plentiful Harvests Weigh on Market Sentiment

March ICE NY cocoa closed Friday at a loss of -89 points (-1.50%), while March ICE London cocoa #7 declined -43 points (-0.99%). The commodity extended its weekly retreat as NY futures hit a 1.5-week trough. The underlying pressure stems from anticipated abundant harvests in West Africa, where optimal weather conditions are accelerating crop development and bolstering supply expectations across the region.

Strong Weather Lifts West African Yields

Cocoa farmers across the Ivory Coast and Ghana report favorable growing conditions. Regions are experiencing well-timed rainfall patterns that support flowering and pod development. The Ivory Coast’s main harvest has commenced with farmer optimism around crop quality, while dry spells are aiding bean curing. According to chocolate manufacturer Mondelez, the current pod count in West Africa stands 7% above the five-year average and “materially higher” than the prior year, signaling robust yields ahead.

Record port arrivals reinforce the abundant supply outlook. Ivory Coast cocoa arrivals reached 895,544 MT from October 1 through December 14 of the marketing year, marking a +0.2% increase from the prior year’s comparable period. As the world’s largest producer, the Ivory Coast’s ample shipments continue to weigh on global prices.

Inventory Support Insufficient to Offset Supply Pressure

While ICE-monitored cocoa inventories at US ports fell to a 9-month low of 1,641,641 bags on Friday—providing some price support—this cushion has proven insufficient to counteract the bearish supply narrative. Weak global demand has compounded the challenge, as chocolate sales have disappointed in key markets.

Third-quarter cocoa grindings data underscores soft consumption patterns. Asia’s Q3 grindings fell 17% year-over-year to 183,413 MT, marking the smallest third-quarter volume in nine years. Europe saw Q3 grindings decline 4.8% year-over-year to 337,353 MT, the lowest for that quarter in a decade. North American chocolate candy sales volumes dropped over 21% in the 13 weeks ending September 7, a significant contraction signaling dampened consumer demand.

Limited Bright Spots in an Oversupply Environment

Production declines in Nigeria, the world’s fifth-largest producer, offer a counterbalance. Nigeria’s cocoa association projects 2025/26 output will fall 11% year-over-year to 305,000 MT, providing modest support. However, this headwind is insufficient to offset the abundant harvest expectations elsewhere.

Futures support emerged briefly when Citigroup trimmed its 2025/26 global cocoa surplus forecast to 79,000 MT from a prior September estimate of 134,000 MT—demonstrating tightening estimates. Additionally, NY cocoa’s inclusion in the Bloomberg Commodity Index beginning January could attract passive fund flows, potentially drawing as much as $2 billion in buying during the first week of January.

Market Outlook Remains Subdued

The broader outlook continues tilted toward downside pressure. The abundant supply trajectory, combined with tepid demand globally, sustains a bearish fundamental backdrop for cocoa futures. While inventory drawdowns and index inclusion provide tactical support, the structural reality of ample harvests keeps price recovery prospects muted in the near term.