Abundant Cocoa Supplies Flood Markets as Demand Crumbles – What's Next for Prices?

Cocoa futures are collapsing under the weight of a supply-demand mismatch that’s reshaping the entire commodity landscape. March ICE NY cocoa futures are down 269 points (-6.07%), while March London cocoa #7 has plummeted 198 points (-6.40%). More alarming for bulls: London cocoa has just hit its lowest level in 2.25 years, signaling that this selloff is no temporary correction—it’s a structural shift driven by two fundamental forces working in tandem.

Prices Tank as Supply Glut Meets Demand Collapse

The math is brutal: abundant global cocoa inventories are colliding head-on with collapsing buyer appetite. The International Cocoa Organization (ICCO) recently reported that 2024/25 global cocoa stocks surged 4.2% year-over-year to 1.1 million metric tons, flooding the market precisely when demand is evaporating. This one-two punch has left price support nowhere to be found.

The message from the world’s largest chocolate makers is unmistakable: consumers are rebelling against high chocolate prices. Barry Callebaut AG, which dominates the global bulk chocolate market, reported a shocking 22% decline in cocoa division sales volume for its most recent quarter, explicitly citing “negative market demand and a prioritization of volume toward higher-return segments.” When the industry’s heavyweight signals retreat, it’s a warning sign that shouldn’t be ignored.

Barry Callebaut and Industry Grinding Reports Signal Weakening Demand

Grinding data—a leading indicator of chocolate production—paints an even darker picture. The European Cocoa Association reported that Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 MT, significantly undershooting the -2.9% decline that analysts expected. For context, this marks the lowest Q4 grinding activity in over a dozen years. Asia isn’t faring much better: Q4 Asian cocoa grindings dropped 4.8% year-over-year to 197,022 MT. Even North America, typically more resilient, saw Q4 grindings rise only a modest 0.3% year-over-year to 103,117 MT.

This synchronized global weakness in chocolate production is the smoking gun proving that cocoa demand isn’t just soft—it’s structurally impaired.

West African Harvest Boom and Farmer Holdings: Abundant Production Meets Price Resistance

On the supply side, West Africa is experiencing near-perfect growing conditions. Tropical General Investments Group noted that favorable weather in the Ivory Coast and Ghana is expected to boost the February-March harvest, with farmers reporting larger and healthier cocoa pods compared to the same period last year. Mondelez recently revealed that West Africa’s cocoa pod count is running 7% above the five-year average and materially higher than last year’s crop.

Yet here’s the paradox: despite abundant production potential, Ivory Coast farmers are deliberately holding back supplies due to crash-level prices. As of late January, Ivory Coast cocoa shipments totaled just 1.20 million metric tons for the current marketing year—down 3.2% from 1.24 million metric tons in the same period a year ago. Farmers are choosing to wait, hoping for better prices that may never come.

Inventory Surge vs Nigeria’s Production Decline: Mixed Signals in the Supply Picture

The inventory picture is complicated. ICE-monitored cocoa stocks held at U.S. ports have rebounded sharply from a 10.5-month low of 1,626,105 bags reached in late December, climbing to a 2.5-month high of 1,773,618 bags—a bearish signal for prices. Simultaneously, Nigeria, the world’s fifth-largest cocoa producer, is showing signs of weakness: November cocoa exports fell 7% year-over-year to 35,203 MT. Nigeria’s Cocoa Association projects that 2025/26 production will contract 11% year-over-year to 305,000 MT from the prior year’s 344,000 MT estimate, providing some modest price support.

Can Tight 2024/25 Outlook Reverse the Downtrend?

The silver lining lies in the longer-term supply picture. The ICCO substantially cut its 2024/25 global cocoa surplus estimate to just 49,000 MT from an earlier 142,000 MT projection, also slashing global production estimates to 4.69 million metric tons from 4.84 million metric tons. Rabobank similarly trimmed its 2025/26 surplus estimate to 250,000 MT from a prior 328,000 MT forecast. These revisions matter because they signal that the abundant current supplies won’t persist indefinitely.

Historical context reinforces the tightening narrative: the ICCO recorded a devastating 2023/24 global cocoa deficit of 494,000 MT—the largest in over 60 years—driven by a 12.9% year-over-year production collapse. With production now expected to recover 7.4% year-over-year in 2024/25 to 4.69 million metric tons, the market is finally shifting from severe shortage toward surplus. But current abundant inventories are buffering the impact on prices.

The cocoa story remains a battle between near-term supply excess and longer-term tightening fundamentals—a tension that will likely define trading dynamics for quarters to come.