Cocoa News: Global Supply Glut Overwhelms Market as Chocolate Demand Falters

The cocoa market is experiencing significant downward pressure, with both New York and London futures contracts hitting multi-year lows. May NY cocoa (CCK26) declined 155 points to -5.06%, while March London cocoa (CAH26) fell 100 points to -4.69%. This bearish momentum reflects a seven-week downtrend, with nearest-futures contracts recording 2.75-year lows. The underlying drivers are clear: abundant global supplies are meeting weak consumer demand for chocolate products worldwide.

Chocolate Consumption Hits a Wall

Demand destruction represents one of the most formidable headwinds facing the cocoa market. Consumer resistance to elevated chocolate prices has prompted major manufacturers to rethink their strategies. Barry Callebaut AG, which commands the world’s largest share of bulk chocolate production, reported a stark -22% collapse in cocoa division sales volume for the quarter ending November 30. The company explicitly cited “negative market demand and a prioritization of volume toward higher-return segments,” signaling that consumers are voting with their wallets.

Grinding data—a key indicator of real-world cocoa processing—paints an equally grim picture. European cocoa grindings in Q4 fell -8.3% year-over-year to 304,470 MT, substantially worse than the anticipated -2.9% decline and marking the lowest quarterly performance in 12 years. Asian cocoa grindings also contracted, dropping -4.8% y/y to 197,022 MT in Q4. Only North America showed modest resilience, with grindings rising just +0.3% y/y to 103,117 MT. Mondelez, another major chocolate producer, recently acknowledged that despite favorable crop conditions, cocoa pod counts in West Africa are running 7% above their five-year average—a sign of ample supply ahead.

Production Surges While Demand Retreats

The supply-demand imbalance has widened dramatically. Most recent forecasts anticipate significant cocoa surpluses looming. StoneX, a leading commodity trading firm, projects global surpluses of 287,000 MT for the 2025/26 season and 267,000 MT for 2026/27. Rabobank, while moderating its earlier forecast, still expects a 250,000 MT surplus for 2025/26—substantially above historical norms.

The International Cocoa Organization (ICCO) reinforced concerns about supply abundance. In December, ICCO estimated a 2024/25 global surplus of 49,000 MT, the first surplus in four years, and noted that global cocoa production jumped +7.4% y/y to 4.69 MMT. More recently, ICCO data showed global cocoa stocks rising +4.2% y/y to 1.1 million metric tons, indicating growing inventory pressure.

West Africa’s Complex Supply Picture

The Ivory Coast and Ghana, which together produce more than half of the world’s cocoa, are navigating a delicate balance. Both nations recently announced substantial cuts to farm-gate prices. Ghana slashed official cocoa prices by nearly 30% for the 2025/26 season, while Ivory Coast signaled a potential 35% price reduction for mid-crop supplies beginning in April. These moves reflect buyer reluctance to pay official prices that remain disconnected from world market rates.

Yet favorable weather in West Africa paradoxically worsens the price outlook. Tropical General Investments Group noted that improved growing conditions are expected to boost mid-crop harvests in February and March, with farmers reporting larger and healthier pods. Ivory Coast’s mid-crop alone represents approximately 25% of annual production and is estimated at 400,000-450,000 MT this year. Meanwhile, the main crop harvest has begun with farmer optimism about quality.

ICE cocoa inventories reflect this supply abundance, reaching a 5.75-month high of 2,155,913 bags recently. Cumulative shipping data from the Ivory Coast shows 1.31 MMT delivered to ports during the current marketing year (October 1, 2025-February 22, 2026), down only -3.7% from the prior-year period, demonstrating resilient supply flows despite price declines.

Nigerian Exports Add to Global Pressure

Nigeria, the world’s fifth-largest cocoa producer, is intensifying export activity. Nigerian cocoa exports surged +17% y/y to 54,799 MT in December, further flooding global markets. However, Nigeria’s cocoa production outlook for 2025/26 is expected to fall -11% y/y to 305,000 MT from a projected 344,000 MT in 2024/25, providing some moderate support to future supply dynamics.

The Cocoa Market Outlook

Despite the prevailing bearish sentiment, modest bullish factors exist. The Ivory Coast projects cocoa production will decline -10.8% y/y to 1.65 MMT in 2025/26 from 1.85 MMT in 2024/25, suggesting potential tightening ahead. Slowing shipments to Ivorian ports also indicate farmers may be holding supplies in anticipation of better prices.

The fundamental cocoa news remains dominated by oversupply and subdued demand. The combination of record production forecasts, rising global inventories, and collapsing chocolate consumption creates a structural headwind unlikely to reverse in the near term. Market participants should monitor further developments in West African production, chocolate maker inventory adjustments, and any recovery signals in global grinding activity for signs of stabilization in cocoa prices.