African Cocoa Supply Squeeze Triggers Price Recovery Amid Weak Global Demand

Cocoa futures rebounded sharply in late February as a confluence of supply constraints and weaker dollar conditions supported prices across major trading hubs. The March contract on ICE New York rose 147 points, or 3.50%, while the London contract gained 73 points, or 2.43%, signaling renewed buying interest after recent sharp declines had pushed prices to their lowest levels in nearly two years. The rally marked a critical reversal for a commodity that had faced relentless selling pressure over the preceding weeks.

West African Producers Curtail Shipments Amid Economic Pressure

The price rebound found support from a deliberate supply management strategy by African cocoa producers facing unprecedented margin compression. Ivory Coast, which commands approximately 40% of global cocoa production, shipped 1.20 million metric tons (MMT) to ports during the October 2025 through January 2026 marketing year—a 3.2% decline compared to 1.24 MMT during the identical period in the prior year. This data reflects a strategic decision by African farmers to reduce sales at depressed price levels, holding inventory in hopes of improved market conditions.

The withholding of cocoa supplies from African producers represents a calculated response to unsustainable pricing. Nigeria, the world’s fifth-largest cocoa producer, saw November exports fall 7% year-over-year to 35,203 metric tons. Looking ahead, Nigeria’s Cocoa Association projects the nation’s 2025/26 production will contract by 11% year-over-year to 305,000 MMT from an estimated 344,000 MMT in the current crop year—a significant reduction that will further tighten African supply availability in the global marketplace.

Global Cocoa Demand Remains Subdued Despite Price Recovery

The supply-side support for prices has been partially offset by persistent weakness in demand from chocolate manufacturers and confectioners. Barry Callebaut AG, the world’s largest bulk chocolate producer, reported a striking 22% collapse in sales volume within its cocoa division for the quarter ending November 30, explicitly attributing the decline to “negative market demand and a prioritization of volume toward higher-return segments within cocoa.” This warning from a major processor signaled that elevated price levels have prompted downstream consumers to reduce their cocoa usage or seek alternative ingredients.

Regional grinding data reinforced the picture of dampened demand across all major consumption centers. The European Cocoa Association reported that fourth-quarter European cocoa grindings fell 8.3% year-over-year to 304,470 metric tons—substantially steeper than market expectations of a 2.9% decline and marking the lowest fourth-quarter volume in 12 years. The Cocoa Association of Asia reported comparable softness, with Q4 Asian grindings declining 4.8% year-over-year to 197,022 metric tons. Even North America showed minimal resilience, with the National Confectioners Association reporting that Q4 North American grindings rose just 0.3% year-over-year to 103,117 metric tons.

Improving African Crop Prospects Inject Long-Term Optimism

Despite near-term demand challenges, favorable growing conditions across West Africa’s primary cocoa regions have elevated expectations for the February-March harvest season. Tropical General Investments Group recently noted that meteorological conditions in Ivory Coast and Ghana remain supportive, with farmers reporting larger and healthier cocoa pods compared to the same period last year. The improvement extends beyond farmer observations: Mondelez, a leading chocolate manufacturer, reported that the latest pod count in West African growing regions stands 7% above the five-year average and materially exceeds the prior year’s harvest, signaling robust crop development across African cocoa territories.

Harvest of Ivory Coast’s main crop has commenced, and producer sentiment regarding both volume and quality remains constructive. This African supply recovery, however, follows a period of severe deficits. In May, the International Cocoa Organization (ICCO) revised its 2023/24 deficit to negative 494,000 metric tons—the largest shortfall in over 60 years—stemming from a 12.9% year-over-year production decline that brought output to just 4.368 MMT.

Inventory Dynamics and Global Supply Reassessment

Recent inventory movements in the United States have provided mixed signals for the price outlook. ICE-monitored cocoa inventories held at U.S. ports reached a 10.25-month low of 1,652,105 bags on December 26, but subsequently rebounded to 1,752,451 bags by early January—a level that remains near two-month highs. This inventory recovery, while bearish from a technical perspective, reflects the earlier surge in cocoa arrivals as market participants anticipated further price declines.

Underpinning the structural shift toward tighter supplies, the ICCO dramatically revised its 2024/25 global surplus estimate downward to 49,000 metric tons on November 28—a staggering reduction from its prior estimate of 142,000 metric tons. The organization simultaneously lowered its 2024/25 global cocoa production forecast to 4.69 MMT from the previous estimate of 4.84 MMT. Nevertheless, the organization’s December 19 estimate of a 49,000 metric ton surplus for 2024/25 marked a significant milestone: the first surplus in four years, following the catastrophic deficits of the prior two crop years. Global cocoa production for 2024/25 is now estimated at 4.69 MMT, reflecting a 7.4% year-over-year increase that underscores recovering African production.

Rabobank, in its independent analysis, similarly cut its 2025/26 global surplus projection to 250,000 metric tons from a November forecast of 328,000 metric tons, confirming that the international market anticipates a gradual tightening as African producers normalize output following the prior decade’s supply challenges.

The combination of reduced African shipments, weakening global demand, and stabilizing production levels has created an environment where prices found support despite structural oversupply conditions. As African cocoa farmers gain confidence in improved crop quality and size, and as global chocolate manufacturers recalibrate their supply strategies around current price levels, the market faces a critical transition point where African supply decisions and global demand patterns will ultimately determine the trajectory of cocoa prices through mid-year.