Abundant Cacao Pods Fail to Prevent Cocoa Price Collapse Amid Demand Slump

Despite favorable growing conditions producing healthy cacao pods across West African farms, global cocoa prices continue their sharp descent. March ICE NY cocoa dropped 276 points (-6.184%), marking a 2-year nearest-futures low, while March ICE London cocoa fell 211 points (-6.57%), hitting a 2.25-year nearest-futures low. The extended two-week price plunge reflects a fundamental mismatch between robust cacao pod supplies and faltering global demand.

Demand Deterioration Outweighs Supply Strength

Chocolate consumption has hit a wall as consumers balk at elevated chocolate prices. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported a devastating -22% decline in cocoa division sales volume for the quarter ending November 30. The company cited “negative market demand and a prioritization of volume toward higher-return segments within cocoa” as key drivers of the collapse.

Regional grinding data underscores weakening downstream demand across all major markets. The European Cocoa Association reported Q4 European cocoa grindings fell -8.3% year-over-year to 304,470 MT—far steeper than the anticipated -2.9% decline and marking the lowest Q4 reading in 12 years. Similarly, the Cocoa Association of Asia reported Q4 Asian cocoa grindings dropped -4.8% year-over-year to 197,022 MT. Even North America showed minimal growth, with the National Confectioners Association reporting Q4 North American cocoa grindings rose just +0.3% year-over-year to 103,117 MT.

West African Cacao Pods Signal Abundant Harvests Ahead

Favorable climate conditions in West Africa are delivering what growers hoped for: larger and healthier cacao pods. Tropical General Investments Group recently highlighted that West African growing conditions are expected to boost the February-March cocoa harvest in the Ivory Coast and Ghana, with farmers reporting significantly larger and more robust pods compared to the same period last year.

Chocolate maker Mondelez corroborated this supply optimism, noting that the latest cacao pod count in West Africa stands 7% above the five-year average and is “materially higher” than last year’s crop. With the Ivory Coast’s main crop harvest already underway, farmers remain optimistic about quality despite price pressures.

Cocoa Inventories Rise Despite Production Shifts

Rising cocoa stocks are adding to bearish price pressures. Since hitting a 10.25-month low of 1,626,105 bags on December 26, ICE-monitored cocoa inventories held in US ports have rebounded, with stocks climbing to a 2-month high of 1,752,451 bags by Thursday. This inventory buildup in major distribution hubs is compounding price weakness.

Global cocoa stocks are equally bloated. The International Cocoa Organization (ICCO) reported today that 2024/25 global cocoa stocks rose +4.2% year-over-year to 1.1 MMT, indicating ample supplies are available despite production challenges in specific regions.

Mixed Regional Supply Signals Complicate Outlook

Ivory Coast, the world’s largest cocoa producer, is showing signs of tightening supplies. Monday’s cumulative data revealed Ivory Coast farmers shipped 1.16 MMT of cocoa to ports during the new marketing year (October 1 through January 18), down -3.3% from 1.20 MMT in the same period last year. This modest supply reduction provides some price support.

Nigeria, the world’s fifth-largest cocoa producer, faces more severe supply constraints. Nigeria’s November cocoa exports fell -7% year-over-year to 35,203 MT. More troubling for bulls, Nigeria’s Cocoa Association projects that Nigeria’s 2025/26 cocoa production will plummet by -11% year-over-year to 305,000 MT from a projected 344,000 MT for the 2024/25 crop year.

Global Surplus Weighs Heavy Despite Tightening Estimates

The ICCO dramatically revised its global 2024/25 cocoa outlook on November 28, cutting the surplus estimate to just 49,000 MT from a previous estimate of 142,000 MT. The organization also lowered its global cocoa production forecast for 2024/25 to 4.69 MMT from 4.84 MMT previously. These downward revisions reflect deteriorating production conditions, yet supplies remain in surplus territory.

Rabobank added to the bearish tone, cutting its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT. Even with tighter estimates on the horizon, current and near-term supplies remain ample.

Deforestation Law Delay Keeps Supplies Flowing

An unexpected regulatory development undercut prices further. On November 26, the European Parliament approved a 1-year delay to the deforestation law (EUDR—the EU regulation aimed at tackling deforestation in key commodity-producing regions). The delay will allow EU countries to continue importing agricultural products from regions in Africa, Indonesia, and South America where deforestation is occurring, keeping cocoa supplies ample and accessible.

Historical Context: From Deficit to Surplus

The cocoa market’s trajectory has shifted dramatically in recent years. On May 30, the ICCO revised its 2023/24 global cocoa deficit to -494,000 MT—the largest deficit in over 60 years. That year, ICCO reported cocoa production had collapsed by -12.9% year-over-year to 4.368 MMT, triggering a historic bull market.

By December 19, the ICCO estimated a 2024/25 global cocoa surplus of 49,000 MT, marking the first surplus in four years. Global cocoa production in 2024/25 rose by +7.4% year-over-year to 4.69 MMT, reflecting recovery in harvests and abundant cacao pods now coming to market. This dramatic swing from acute shortage to surplus has reversed the price narrative entirely, weighing heavily on values despite the quality of newly harvested pods.

The combination of weak global demand, rising inventories, regulatory support for imports, and abundant cacao pod supplies across West Africa has created a perfect storm for cocoa prices, likely to keep the commodity under sustained pressure in the near term.