West African Cocoa Boom Presses Prices Lower as Abundant Supplies Flood Markets

Cocoa futures took a hit on Friday as market participants digest the reality of mounting production in the world’s top-growing regions. March contracts on ICE NY dropped 89 points, settling at -1.50%, while March ICE London cocoa fell 43 points to -0.99%, extending losses that had built throughout the week. The primary culprit: expectations of abundant cocoa supplies emerging from West Africa are weighing heavily on price sentiment.

Ideal Growing Conditions Trigger Output Surge

The supply outlook has shifted dramatically, largely due to favorable weather patterns reshaping agricultural prospects across the region. Ivory Coast farmers report that the combination of rain and sunshine is spurring robust cocoa bloom, while Ghana’s agricultural community notes consistent rainfall supporting pod development as the harmattan season approaches. This weather narrative has become increasingly concrete as chocolate maker Mondelez disclosed that the latest cocoa pod count in West Africa sits 7% above the five-year average and noticeably higher than last year’s harvest levels.

The harvest cycle in the Ivory Coast, the planet’s leading cocoa producer, has officially commenced, with farmers expressing optimism regarding crop quality. Recent data underscores this confidence: port arrivals in Ivory Coast reached 895,544 MT between October 1 and December 14, representing a +0.2% increase compared to the prior-year period. Dry weather has proven beneficial for bean processing, while Ghana’s agricultural regions continue experiencing conditions that accelerate pod maturation.

Abundant Production Forecasts Reshape Market Calculations

Industry analysts have progressively trimmed their global cocoa surplus projections, though the direction points toward supply abundance rather than scarcity. The International Cocoa Organization initially estimated a 49,000 MT surplus for 2024/25—marking the first surplus after four consecutive years of deficits—while revising 2024/25 production upward to 4.69 MMT, a +7.4% year-over-year increase. Most recently, Citigroup recalibrated its 2025/26 surplus forecast to 79,000 MT, down from 134,000 MT projected in September, yet this adjustment still signals material supply availability.

Rabobank similarly adjusted expectations, trimming its 2025/26 surplus to 250,000 MT from a November forecast of 328,000 MT. While these downward revisions might suggest tightening dynamics, the absolute surplus levels remain substantial enough to suppress bullish momentum in futures contracts.

Demand Weakness Compounds Pressure

On the consumption side, market signals point toward weakness rather than strength. Hershey’s leadership disclosed “disappointing” chocolate sales during the Halloween season, an event that typically represents nearly 18% of annual US candy sales. Meanwhile, regional grinding data paints a concerning picture: Asia’s Q3 cocoa grindings contracted 17% year-over-year to 183,413 MT—the weakest third-quarter performance in nine years. European Q3 grindings fell 4.8% year-over-year to 337,353 MT, marking a decade low for third-quarter processing.

North America showed modest growth of +3.2% in Q3 grindings to 112,784 MT, though new reporting entrants skewed the dataset. More tellingly, North American chocolate candy sales volume plunged more than 21% in the 13 weeks ending September 7 compared to the prior-year period, according to market research from Circana.

Inventory Dynamics and Regulatory Headwinds

ICE-monitored cocoa inventories at US ports contracted to 1,641,641 bags—a nine-month low—providing modest support. However, this floor proved insufficient to counteract broader selling pressure. In early November, the European Parliament approved a one-year delay to the deforestation regulation (EUDR), allowing EU nations to continue importing agricultural products from regions experiencing deforestation. The deferral maintains ample global cocoa channel availability by extending the window for sourcing from traditional high-deforestation zones in Africa, Indonesia, and South America.

Limited Bullish Catalysts on the Horizon

Price support emerged briefly when Citigroup trimmed surplus expectations and when the inclusion of NY cocoa in the Bloomberg Commodity Index (BCOM) was announced for January implementation. According to Citigroup estimates, this index inclusion could potentially drive $2 billion in passive fund purchases into NY cocoa futures within the first week of January. Cocoa reached five-week highs last Thursday amid brief tightening narratives, yet this rally proved temporary.

Nigeria, the world’s fifth-largest producer, projects its 2025/26 output will contract 11% year-over-year to 305,000 MT, offering a counterbalance to abundant West African production. September cocoa exports from Nigeria remained flat year-over-year at 14,511 MT.

Market Perspective

The cocoa market continues navigating conflicting signals, yet the preponderance of abundant supply expectations from major producing regions tilts the scales toward price pressure rather than support. Unless demand indicators sharpen materially or production surprises emerge on the downside, traders should anticipate cocoa prices to remain range-bound with a downward bias in near-term sessions.