West African Cocoa Bumper Crop Pressures Futures Markets Across Major Exchanges

December cocoa futures experienced substantial declines on Tuesday, with ICE NY cocoa (CCZ25) dropping 273 points to -4.47% and London cocoa #7 (CAZ25) falling 206 points or -4.73%. Both contracts touched fresh lows—NY posting a 4-week bottom while London hit a 3-week floor. The selloff marks a sharp retreat from 6-week highs established the previous week, driven primarily by mounting expectations surrounding abundant harvests in West Africa’s primary cocoa-producing regions.

Supply-Side Dynamics Overwhelm Price Support

Favorable agricultural conditions across major producing zones have bolstered output expectations significantly. Farmers in Ivory Coast report healthy tree development, with recent dry weather accelerating bean desiccation on farms. Ghana’s agricultural sector similarly benefits from timely weather patterns facilitating rapid pod maturation. Mondelez’s latest crop assessment indicates West African cocoa pod counts currently exceed the five-year average by 7% while running “materially higher” than prior-year levels. With Ivory Coast’s primary harvest phase just commencing, growers express confidence regarding quality parameters.

Demand Weakness Compounds Downward Pressure

Simultaneous weakness in global consumption patterns reinforces the bearish environment for cocoa prices. Hershey’s leadership disclosed “disappointing” chocolate sales performance during the recent Halloween retail period, an important seasonal driver representing nearly 18% of annual US candy sales. Processing activity data from major consuming regions confirms demand contraction: Asia’s Q3 cocoa grindings contracted 17% year-over-year to 183,413 MT (the weakest third-quarter result in 9 years), while European grindings declined 4.8% y/y to 337,353 MT (a 10-year low for the quarter). North American chocolate confectionery volumes dropped over 21% in the 13-week period ending September 7 relative to the prior-year comparison.

Export Flows and Market Positioning

Physical market indicators reveal emerging tightness at the Ivorian port level. Cocoa shipments to ports during the current marketing year (October 1–November 8) totaled 411,979 MT, representing a 9% year-over-year decline from 454,624 MT in the equivalent prior-period timeframe. Conversely, ICE-monitored US port inventory positions reached a 7.5-month nadir of 1,786,616 bags, supporting underlying price floors.

Speculative positioning data from the Commitment of Traders report reveals funds maintaining excessively concentrated net-short exposure in London cocoa at 19,194 contracts—the highest short interest recorded in over 4 years. Such positioning establishes preconditions for potential short-covering rallies, though near-term technicals remain pressured.

Structural Backdrop and Index Integration

The inclusion of cocoa in the Bloomberg Commodity Index beginning January 2025—marking re-entry after 20 years—initially catalyzed a rally last week amid expectations of passive fund inflows. With BCOM assets totaling approximately $109 billion and cocoa representing 1.7% weighting, research indicates passive trackers require roughly $1.9 billion in cocoa futures accumulation across an 80-day period. However, this medium-term supportive structure currently struggles against immediate supply abundance dynamics.

Nigeria’s production outlook adds complexity to the structural narrative. The Cocoa Association projects 2025/26 output declining 11% year-over-year to 305,000 MT from the current 344,000 MT estimate, potentially tightening global supplies at year-end. The International Cocoa Organization’s most recent assessments indicate the 2024/25 season will generate a 142,000 MT global surplus—the first surplus in four years—following 2023/24’s record deficit of 494,000 MT.