West African Rainfall Boosts Cocoa Supply Outlook, Pressuring Global Market Dynamics

The global cocoa market faced renewed selling pressure as favorable weather patterns across major West African growing regions promise substantial crop improvements. March futures on ICE New York declined 88 points (-1.48%), while London’s March contract fell 48 points (-1.11%), extending losses that have pushed New York cocoa to its lowest level in 1.5 weeks.

Supply Expansion Reshapes Market Sentiment

Weather conditions in the world’s largest cocoa-producing regions have shifted decisively. In the Ivory Coast, producers report optimal combinations of rain and sunshine promoting vigorous tree blooming, while Ghanaian farmers cite consistent precipitation supporting pod maturation before the harmattan season arrives. Chocolate manufacturer Mondelez quantified this improvement, noting the latest pod inventory count runs 7% above the five-year average and “materially higher” than the previous year’s harvest.

The Ivory Coast’s primary crop harvest commenced recently with farmer sentiment tilted positive. Early season port data underscored increasing supplies, as government figures showed 895,544 MT shipped through December 14 of the current marketing year—up marginally from 894,009 MT in the comparable prior-year period. Recent dry spells have further aided bean drying operations, while Ghana’s favorable conditions accelerated pod development velocity.

Demand Signals Remain Lackluster

Consumption indicators painted a weaker picture across major processing regions. Asia’s Q3 cocoa grindings contracted 17% year-over-year to 183,413 MT, marking the smallest third-quarter volume in nine years. European grindings declined 4.8% to 337,353 MT, the lowest for any third quarter in a decade. North American chocolate confectionery volume tumbled over 21% in the 13 weeks through early September versus year-ago comparisons, despite North American grindings rising 3.2% to 112,784 MT—a figure skewed upward by new reporting company additions.

Hershey’s chief executive acknowledged “disappointing” chocolate sales during the critical Halloween season, which historically represents nearly 18% of annual US candy market demand.

Offsetting Supportive Elements Provide Modest Stabilization

Shrinking physical inventories offered price support, as ICE-monitored cocoa stocks at US ports reached a nine-month trough of 1,642,801 bags on Thursday. Citigroup’s revised 2025/26 surplus estimate provided temporary relief—the bank cut its forecast to 79,000 MT from a September projection of 134,000 MT. Rabobank similarly reduced its 2025/26 surplus estimate to 250,000 MT from 328,000 MT previously.

Index inclusion mechanics created additional buying interest. New York cocoa’s scheduled addition to the Bloomberg Commodity Index beginning January could channel as much as $2 billion into futures during the opening week, as passive funds rebalance allocations to track the benchmark.

Production Headwinds in Secondary Regions

Nigeria’s cocoa sector presented a countervailing weakness. The nation’s Cocoa Association projects 2025/26 output at 305,000 MT, representing an 11% year-over-year decline from the projected 344,000 MT for 2024/25. September exports remained flat year-over-year at 14,511 MT.

Broader policy developments created near-term supply stability. The European Parliament’s November approval of a one-year postponement to the deforestation regulation (EUDR) allowed continued imports from regions experiencing forest clearing, sustaining global availability relative to stricter implementation scenarios.

Market Recovery Context and Price Resilience

Cocoa prices had rallied sharply to five-week peaks last Thursday amid tightening supply perceptions. The International Cocoa Organization cut its 2024/25 surplus to 49,000 MT on November 28—a substantial revision from a prior 142,000 MT estimate—while lowering production to 4.69 MMT from 4.84 MMT. This marked the first projected surplus in four years following 2023/24’s historic 494,000 MT deficit, when global stocks-to-grindings ratios compressed to a 46-year minimum of 27.0%.

The convergence of rising supplies, depressed consumption, and supportive inventory mechanics has created competing pressures on cocoa valuations as the market processes expectations for 2025/26 crop dynamics.