West African Cocoa Outlook Brightens, Pressuring Futures Lower Despite Mixed Signals

Cocoa futures have pulled back today, reflecting a positive cocoa crop outlook emerging from West Africa. March delivery on ICE New York slipped -40 points to -0.67%, while March futures on ICE London declined -26 points, representing a -0.60% drop. The pullback marks a retreat to fresh 7-day lows as traders digest improving weather conditions across major producing regions.

Favorable Growing Conditions Boost Production Expectations

A positive cocoa crop outlook is taking shape across the world’s top cocoa-producing regions. Ivory Coast farmers report that alternating rainfall and clear skies are stimulating bloom activity on cocoa trees, while Ghana’s agricultural sector notes that consistent precipitation has supported pod development heading into the harmattan season. These conditions have lifted spirits among growers, who see quality improvements ahead for the upcoming harvest.

Chocolate manufacturer Mondelez quantified the improvement: current pod counts in West Africa stand 7% above the five-year benchmark, with figures materially exceeding the prior year’s output. The Ivory Coast’s primary crop harvest is underway, and farmer sentiment remains constructive about yield and quality expectations. This positive cocoa supply picture contrasts sharply with the severe supply constraints witnessed in prior years.

Inventory Tightness Provides Temporary Support

Despite the bearish price pressure from ample supply expectations, one stabilizing factor persists: warehouse scarcity. ICE-monitored cocoa stocks stationed at US ports fell to a 9-month bottom of 1,643,161 bags by Wednesday, offering some floor under values. This inventory depletion provides tactical support even as fresh supply concerns weigh on sentiment.

Structural Changes on the Horizon

A significant development looming in January could inject fresh demand: NY cocoa futures will gain inclusion in the Bloomberg Commodity Index beginning next month. Citigroup analysts project this addition could trigger approximately $2 billion in passive index fund inflows during the opening week of trading. However, this potential buying surge will face headwinds from the positive cocoa crop trajectory already priced into current levels.

Supply Pipeline Growing

The Ivory Coast government released shipment data showing farmers delivered 895,544 MT of cocoa to export facilities during the October 1 through December 14 window—a modest +0.2% increase from the 894,009 MT shipped in the equivalent prior-year period. This incremental growth in arrivals continues to feed the positive cocoa supply narrative.

Demand Weakness Adds Downside Pressure

Offsetting any production concerns is the stubborn weakness in global chocolate demand. Hershey’s leadership characterized this Halloween season’s chocolate sales as “disappointing,” notable since Halloween drives roughly 18% of US confectionery sales annually. Regional grinding data paints an equally grim picture: Asia’s Q3 cocoa grindings contracted -17% year-over-year to 183,413 MT—the weakest third quarter in nine years. European grindings fell -4.8% to 337,353 MT, marking a 10-year low for the period. North American grindings rose +3.2%, though new company additions distorted the figures.

Consumer behavior underscores the malaise: chocolate candy sales volume across North America declined more than -21% during the 13-week span ending September 7 versus the prior year, per Circana research.

Nigeria’s Declining Production Offers Limited Offset

While Nigeria, the world’s fifth-largest cocoa producer, faces headwinds, the impact remains modest. The Nigerian Cocoa Association projects 2025/26 production will drop -11% year-over-year to 305,000 MT from an anticipated 344,000 MT in 2024/25. September exports held steady at 14,511 MT year-over-year, suggesting limited supply disruption from the region.

Market Context: From Deficit to Surplus Territory

The positive cocoa crop outlook represents a dramatic reversal from conditions just 18 months ago. The International Cocoa Organization declared a historic 2023/24 deficit of -494,000 MT—the deepest shortfall in over six decades—after production contracted -12.9% to 4.368 MMT. The global stocks-to-grindings ratio plummeted to a 46-year nadir of 27.0%.

The pendulum has now swung sharply. ICCO’s most recent estimate pegged 2024/25 global production at 4.69 MMT, up +7.4% year-over-year, culminating in a projected 49,000 MT surplus—the first surplus in four years. Citigroup has since trimmed its 2025/26 surplus estimate to 79,000 MT from a September projection of 134,000 MT, while Rabobank cut its 2025/26 outlook to 250,000 MT from 328,000 MT in November.

The positive cocoa crop trajectory, reinforced by West African growing conditions and rising pod counts, continues to overshadow tactical inventory support and the forthcoming index inclusion benefit.