Cocoa Market Faces Persistent Headwinds Despite Recent Price Bounce

A modest rally in cocoa futures failed to reverse weeks of selling pressure as the market grapples with the structural challenge of oversupply meeting anemic demand. Near-term price gains mask a troubling reality: global cocoa supplies remain abundant while consumers continue pulling back from chocolate purchases at current valuations.

March ICE NY cocoa settled +45 points at +1.08%, while March ICE London cocoa gained +84 points or +2.88%, offering a temporary reprieve from the relentless selling that pushed prices to multi-year lows last week. The modest recovery reflects tactical short-covering activity rather than any fundamental shift in market sentiment, analysts suggest. New York cocoa touched a 2.25-year low, while London cocoa sank to a 2.5-year nadir, illustrating the depth of bearish sentiment that continues to dominate trading.

Ivory Coast Shipments Slip as Global Cocoa Output Shows Signs of Weakness

Deliveries of cocoa to Ivorian ports have disappointed so far this season, signaling the first cracks in what had been abundant global supplies. Through early February 2026, the Ivory Coast—responsible for roughly one-third of global cocoa production—has shipped 1.23 million metric tons to ports, representing a 4.7% decline from the prior year’s comparable period. This slowdown in the world’s largest cocoa-producing nation provides limited support given the broader demand landscape.

The complexity deepens when examining production estimates. StoneX forecasts a global cocoa surplus of 287,000 MT for the 2025/26 season and another 267,000 MT surplus looming for 2026/27. These projections suggest that even with softer Ivorian shipments, excess cocoa supplies will continue to pressure prices downward. The International Cocoa Organization reported in late January that global cocoa stockpiles rose 4.2% year-over-year to 1.1 million metric tons, adding to inventory overhang concerns.

Chocolate Makers Cut Demand as Consumers Resist High Cocoa Prices

Perhaps the most troubling indicator for cocoa traders has been the deterioration in downstream demand. Barry Callebaut AG, the world’s dominant bulk chocolate manufacturer, revealed a sharp 22% decline in sales volume from its cocoa division during the quarter ending November 30. Management attributed the weakness to “negative market demand and a prioritization of volume toward higher-return segments,” a euphemism for customers abandoning premium chocolates amid price resistance.

Industrial grinding reports paint an even bleaker picture of cocoa consumption. The European Cocoa Association reported Q4 European cocoa grindings fell 8.3% year-over-year to 304,470 MT—a steeper decline than the 2.9% contraction that had been anticipated and the weakest Q4 performance in a dozen years. Asian cocoa grindings proved equally anemic, with the Cocoa Association of Asia recording a 4.8% y/y decline to 197,022 MT in Q4. North American cocoa grindings managed only a negligible +0.3% increase to 103,117 MT, demonstrating that demand weakness spans all major chocolate-consuming regions globally.

Cocoa Inventory Surge Signals Persistent Bearish Pressures

Physical cocoa inventories held at US ports have rebounded sharply from December lows, adding additional downward momentum to an already fragile market. ICE-monitored cocoa stockpiles climbed to a 2.5-month high of 1,775,219 bags last week, up substantially from the December 26 low of 1,626,105 bags. This inventory buildup represents a classic bearish technical setup, suggesting that price recovery attempts will continue encountering supply-side resistance.

West Africa’s Cocoa Harvest Adds to Supply Uncertainties

While Ivorian shipment declines offered a glimmer of support, the broader West African cocoa production outlook presents mixed implications. Tropical General Investments Group highlighted favorable growing conditions across West Africa that are expected to amplify the February-March cocoa harvest in both Ivory Coast and Ghana. Farmers in these regions are reporting larger and healthier pods compared to the prior year, a sign that the current crop quality may exceed expectations.

Mondelez underscored this optimistic assessment, noting that the latest cocoa pod count across West Africa stands 7% above the five-year average and materially higher than last year’s production. This abundance suggests that cocoa prices may face renewed downside pressure as the main crop harvest accelerates through the coming weeks.

Nigeria Cocoa Weakness Offers Limited Support

Small offset to the supply glut comes from Nigeria, the world’s fifth-largest cocoa producer, where production has faltered. Nigerian cocoa exports fell 7% year-over-year to 35,203 MT in November, and the country’s Cocoa Association projects 2025/26 production will decline 11% to 305,000 MT from an estimated 344,000 MT in the prior crop year. This contraction provides modest price support, though insufficient to counterbalance oversupply conditions elsewhere.

Historical Context: Cocoa Markets Cycle Between Scarcity and Glut

Understanding cocoa’s current predicament requires examining the dramatic swings the market has experienced. The International Cocoa Organization shocked participants on May 30 when it revised the 2023/24 season to show a deficit of -494,000 MT—the largest shortage in over six decades, when production plummeted 12.9% to 4.368 MMT. This acute scarcity drove aggressive price rallies and forced demand destruction.

The pendulum has since swung decisively. By November 28, the ICCO had revised downward its 2024/25 cocoa surplus estimate to just 49,000 MT from a prior 142,000 MT projection. However, revised figures released December 19 showed global cocoa production in 2024/25 surged 7.4% to 4.69 MMT, marking the first surplus after four consecutive deficit years. Rabobank subsequently cut its 2025/26 surplus forecast to 250,000 MT from a November estimate of 328,000 MT, reflecting an evolving supply picture.

The historical context reveals cocoa’s structural vulnerability: market participants have swung from celebrating the largest deficit in 60 years to confronting fresh surplus concerns within months. This volatility underscores the challenge facing cocoa traders seeking stability in a commodity whose fundamentals oscillate between scarcity-driven rallies and abundance-driven selloffs. Current pricing dynamics suggest the market remains firmly in the abundance phase of this cycle.