Cocoa Market Faces Historic Shift: From Record Deficit to Ample Supply History

The global cocoa market is experiencing a dramatic reversal after years of shortage. Following 2023/24’s catastrophic deficit—the largest in over 60 years at negative 494,000 metric tons—the sector has swung to an ample supply environment that’s now crushing prices. March ICE New York cocoa futures recently fell to their lowest level in two years, while London cocoa hit a 2.25-year low, both reflecting the weight of abundant inventory across global markets.

This transition from scarcity to plenty represents a critical turning point. Understanding cocoa’s ample supply history and how we arrived here reveals the pressures reshaping the industry today.

The Perfect Storm: Demand Collapse Meets Supply Abundance

Chocolate consumers are voting with their wallets, and the message is clear—prices have risen too high. Barry Callebaut, the world’s largest bulk chocolate manufacturer, reported a stark 22% drop in cocoa division sales volume for the quarter ending November 30. The company cited “negative market demand and a prioritization of volume toward higher-return segments within cocoa,” signaling that manufacturers are actively reducing reliance on the commodity.

This weakness extends across all major consuming regions. European cocoa grindings fell 8.3% year-over-year in the fourth quarter to 304,470 metric tons—a 12-year low for any Q4 period and well below the expected 2.9% decline. Asian cocoa grindings declined 4.8% year-over-year to 197,022 metric tons. North American grindings barely grew, rising just 0.3% year-over-year to 103,117 metric tons. Global demand remains tepid, a structural headwind that ample inventories are only amplifying.

From Shortage to Ample History: The Supply Reversal

The ample supply dynamic didn’t emerge overnight. The International Cocoa Organization (ICCO) reported that global cocoa stocks have now risen 4.2% year-over-year to 1.1 million metric tons—a marked departure from the record deficits that dominated the market just months earlier. This swing back to surplus conditions represents part of cocoa’s ample supply history, though now compressed into a shorter timeframe.

In December, ICCO officially estimated 2024/25 global cocoa production at 4.69 million metric tons, up 7.4% from the prior year. This marked the first surplus year in four years at 49,000 metric tons—though ICCO had dramatically cut this surplus estimate from a previous projection of 142,000 metric tons. Rabobank further reduced its 2025/26 surplus estimate to 250,000 metric tons from 328,000 metric tons previously, suggesting the ample supply environment will persist.

Growing Conditions Bolster the Ample Supply Outlook

West African growing conditions are proving exceptionally favorable, adding to the ample supply picture. Tropical General Investments Group noted that February-March harvests in Ivory Coast and Ghana are expected to benefit from larger and healthier pods compared to the year-ago period. Mondelez reported that the latest pod counts in West Africa are 7% above the five-year average and “materially higher” than last year’s crop.

The Ivory Coast, the world’s largest cocoa producer, has begun harvesting its main crop, and farmers express optimism about quality. However, year-to-date cocoa shipments from Ivory Coast reached just 1.16 million metric tons through January 18—down 3.3% from 1.20 million metric tons in the same period a year ago. This represents one of the few bright spots supporting prices in an otherwise bearish environment.

Nigeria, the world’s fifth-largest cocoa producer, shows worrying signs. November cocoa exports fell 7% year-over-year to 35,203 metric tons. More concerning, Nigeria’s Cocoa Association projects 2025/26 production will slide 11% year-over-year to 305,000 metric tons from an estimated 344,000 metric tons in 2024/25. Smaller supplies from Nigeria provide modest price support, but insufficient to offset broader ample supply pressures.

Inventory Dynamics: A Mixed Picture

ICE-monitored cocoa inventories held at U.S. ports rebounded from a 10.25-month low of 1.63 million bags reached on December 26. Stocks climbed to a 2-month high of 1.75 million bags by Thursday, creating a bearish inventory backdrop. The rebound in stored supplies underscores the return to ample conditions after months of constrained availability.

Policy and Market Sentiment

The European Parliament’s November decision to delay the deforestation law (EUDR) by one year delivered another bearish blow to cocoa prices. The regulation aims to restrict imports of commodities including cocoa from regions experiencing deforestation—primarily West Africa, Indonesia, and South America. By extending the implementation timeline, EU countries can continue importing from these regions, effectively maintaining ample supplies and removing a potential supply-side constraint that might have otherwise supported prices.

The convergence of weak demand, abundant supplies, favorable growing conditions, and delayed environmental regulations has created a perfect storm for cocoa bulls. The transition from cocoa’s ample supply history—marked by the record 2023/24 deficit—to today’s surplus environment represents a fundamental market reset that prices are now digesting.