West African Cocoa Boom Clashes With Demand Collapse and Trade Uncertainty

December ICE NY cocoa futures (CCZ25) dropped -33 points (-0.62%) while December ICE London cocoa #7 (CAZ25) fell -60 points (-1.47%), reflecting mounting pressure on the world’s most crucial chocolate commodity.

Supply Optimism Meets Global Demand Crisis

The fundamental story reshaping cocoa markets centers on a collision between abundant West African harvests and collapsing consumption worldwide. Ivory Coast, accounting for roughly one-third of global cocoa supply, has shipped 516,787 MT of cocoa to ports during the current marketing year (October 1 through November 16)—a -5.7% decline from 548,494 MT in the same 2023 period. Yet despite this modest pullback, farmer reports from major producing regions paint a strikingly bullish supply picture.

Cocoa farmers across West Africa report exceptionally favorable crop conditions. Trees have developed robustly, with recent dry weather assisting bean desiccation, while Ghana’s growers cite conducive climate patterns accelerating pod maturation. Mondelez, a major chocolate manufacturer, revealed that current Ivory Coast pod counts reached 107% of the five-year average—materially exceeding last year’s harvest levels.

Simultaneously, global cocoa demand is contracting sharply across all major consuming regions. Hershey’s leadership disclosed that Halloween chocolate sales proved “disappointing,” a concerning signal given that Halloween represents nearly 18% of annual US candy industry revenues, trailing only Christmas. The weakness extends internationally: Asia’s Q3 cocoa grindings plummeted -17% year-over-year to 183,413 MT—the smallest quarterly crush in nine years. European Q3 cocoa grindings declined -4.8% y/y to 337,353 MT, marking a decade low for third-quarter processing. North American chocolate candy sales volume contracted more than -21% during the 13-week period ending September 7.

Trade Policy Uncertainty Amplifies Downward Pressure

The Trump administration’s tariff announcement added fresh headwinds last Friday. A proposed 10% reciprocal tariff reduction on non-US-grown commodities, including cocoa, introduced unexpected cost relief into the supply chain. However, Brazilian cocoa imports—originating from the world’s fifth-largest producer—remain exposed to a 40% national-security tariff, partially offsetting broader tariff benefits.

Production Outlook: Nigeria Signals Production Decline

Nigeria, the world’s fifth-largest cocoa producer, presents a contrasting supply narrative. The Nigerian Cocoa Association projects 2025/26 production will contract -11% year-over-year to 305,000 MT from an anticipated 344,000 MT in 2024/25. September Nigerian cocoa exports remained flat at 14,511 MT, suggesting no near-term relief from the region.

Inventory and Longer-Term Production Trends

ICE-monitored cocoa inventories at US ports touched a 7.75-month low of 1,766,644 bags on Friday, providing modest price support despite broader weakness.

The International Cocoa Organization (ICCO) established critical context for current market dynamics. The organization reported a record global cocoa deficit of -494,000 MT in 2023/24—the worst deficit in over 60 years—driven by production that fell -13.1% to 4.380 MMT. The global stocks-to-grindings ratio compressed to an unprecedented 46-year low of 27.0%.

ICCO’s 2024/25 outlook brightened considerably. The organization projects a global cocoa surplus of 142,000 MT, marking the first surplus in four years, supported by anticipated global production growth of +7.8% to 4.84 MMT.

For commodity traders and chocolate industry participants, cocoa prices now face countervailing forces: structural supply abundance and demand weakness pushing lower, partially offset by trade policy uncertainty and Nigeria’s projected production contraction.

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