Cocoa Prices Fall Sharply Across the International Market as Demand Weakens

The international cocoa market faced significant downward pressure in recent weeks, with cocoa prices in the international market retreating to multi-year lows. ICE NY cocoa March contracts (CCH26) dropped 6.18%, shedding 276 points, while ICE London cocoa March contracts (CAH26) fell 6.57%, losing 211 points. This marks the third consecutive week of decline, with New York cocoa reaching its lowest level in two years and London cocoa hitting a 2.25-year low. The sharp pullback reflects a fundamental shift in market dynamics, driven primarily by collapsing consumer demand and rising inventory levels worldwide.

Chocolate Producer Sales Plunge, Signaling Demand Crisis

Barry Callebaut AG, the world’s largest supplier of bulk chocolate, reported a 22% year-over-year decline in cocoa division sales for the quarter ending November 30, directly attributing the weakness to dampened market demand. This sharp drop from the industry leader underscores the severity of demand erosion in the cocoa market. Elevated chocolate prices have deterred consumers globally, creating a vicious cycle where higher cocoa prices translate to reduced chocolate consumption, further depressing cocoa demand. The company’s cautious outlook suggests little near-term relief for prices in the international cocoa market.

Regional Consumption Collapses to Multi-Year Lows

The weakness extends across all major consuming regions. European cocoa grinding—a key indicator of chocolate production—fell 8.3% year-over-year to 304,470 metric tons in the fourth quarter, marking the lowest Q4 result in 12 years and sharply worse than the anticipated 2.9% decline. Asia’s performance was similarly disappointing, with Q4 grindings sliding 4.8% to 197,022 metric tons. North America provided the only modest support, with grindings edging up just 0.3% to 103,117 metric tons. This synchronized global contraction in cocoa consumption has intensified pressure on prices across the international market.

Inventory Glut Weighs on Cocoa Prices in Global Market

The International Cocoa Organization (ICCO) reported that global cocoa inventories for the 2024/25 season swelled 4.2% year-over-year to reach 1.1 million metric tons, adding significant bearish weight to cocoa prices. This inventory surge contradicts the typical seasonal pattern and reflects weak offtake demand. ICE-monitored cocoa inventories at U.S. ports tell a similar story: after hitting a 10.25-month low of 1,626,105 bags on December 26, stocks rebounded to a two-month high of 1,752,451 bags by Thursday, reinforcing bearish sentiment toward cocoa prices in the international market.

West Africa’s Favorable Harvest Threatens Further Price Erosion

Despite some positive supply-side signals elsewhere, West Africa’s improving growing conditions are poised to add more downward pressure. Tropical General Investments Group noted that enhanced weather patterns are expected to support the February-March cocoa harvest in both Ivory Coast and Ghana, with farmers reporting more robust and healthier pods compared to the previous year. Mondelez, a major chocolate manufacturer, confirmed this assessment, noting that the latest pod count in West Africa stands 7% above the five-year average and substantially higher than last year’s crop. With Ivory Coast’s main harvest underway and local farmers expressing optimism about crop quality, the region appears set to deliver ample supplies to the international cocoa market.

Moderate Supply Tightening Offers Limited Price Support

Despite the overwhelmingly bearish backdrop, there are emerging signals of supply constraints that could eventually support cocoa prices. Ivory Coast, the world’s leading cocoa producer, shipped 1.16 million metric tons of cocoa to ports from October 1 to January 18—a 3.3% decrease compared to the same period last year. Nigeria, the fifth-largest producer globally, is also experiencing output pressures. November cocoa exports fell 7% year-over-year to 35,203 metric tons, and the Nigerian Cocoa Association forecasts a concerning 11% production decline for the 2025/26 season, with output projected at 305,000 metric tons versus 344,000 metric tons for 2024/25.

The ICCO dramatically revised its 2024/25 surplus estimate downward to 49,000 metric tons from 142,000 metric tons previously—a substantial 65% reduction. The organization also trimmed its global production estimate for 2024/25 to 4.69 million metric tons from 4.84 million metric tons. Similarly, Rabobank reduced its 2025/26 global surplus projection to 250,000 metric tons from 328,000 metric tons. These downward revisions suggest that supply-side tightness may gradually emerge, but such support remains distant given the current oversupply.

Regulatory Environment Supports Continued Supply Ample

On November 26, the European Parliament approved a one-year postponement of its deforestation regulation (EUDR), which targets deforestation linked to key commodity imports including cocoa. This delay preserves the ability for continued imports from West Africa, Indonesia, and South America—regions where deforestation pressures persist. The regulatory reprieve should enable ample cocoa supplies to flow into the international market without interruption.

The historic context underscores how dramatically the market has shifted. The ICCO estimated a record -494,000 metric ton deficit for 2023/24—the largest shortfall in over six decades—following a 12.9% year-over-year production collapse to 4.368 million metric tons. However, with cocoa production rebounding 7.4% year-over-year to 4.69 million metric tons for 2024/25, the market is swinging into surplus for the first time in four years. This swing from scarcity to abundance explains much of the current bear market in cocoa prices, and the international cocoa market is unlikely to find meaningful support until consumption stabilizes and supply dynamics tighten substantially.