Cocoa Market Rebounds from Recent Lows as Shipment Growth Stutters in Ivory Coast

Cocoa futures posted gains on Monday, reversing the prior week’s steep declines. ICE New York cocoa contracts (CCH26) closed 45 points higher at +1.08%, while ICE London cocoa (CAH26) advanced 84 points, or +2.88%. The modest recovery came as traders responded to evidence that cocoa inflows to West African ports have slowed compared to year-ago levels, sparking renewed interest among market participants to cover short positions.

The latest shipping data tells a cautionary story about supply dynamics. Through early February in the current 2025/26 marketing year, Ivory Coast farmers delivered 1.23 million metric tons (MMT) of cocoa to ports—down 4.7% versus 1.24 MMT for the equivalent period in the prior year. As the planet’s leading cocoa producer by a significant margin, Ivory Coast represents the critical barometer for global supply flows. This slowdown in cocoa movement has caught the attention of traders who had been betting on continued weakness, prompting some to buy back positions at current levels.

Demand Weakness Persists Across Multiple Regions

The upside move in cocoa prices masks deeper structural challenges facing the market on the consumption side. High chocolate prices have driven consumers away from premium confectionery products, creating a demand problem that weighs on prices over the medium term. Barry Callebaut AG, which dominates global bulk chocolate production, reported a steep 22% volume decline in its cocoa division for the quarter ending November 30. The company attributed the collapse to “negative market demand and a prioritization of volume toward higher-return segments,” signaling that even large industrial players are struggling with cocoa-related profitability.

Grinding data from three major regions reinforce the picture of slackening cocoa consumption. European cocoa grindings fell 8.3% year-over-year to 304,470 MT in the fourth quarter—a sharper drop than the expected 2.9% decline and marking the weakest Q4 performance in over a decade. Asian grindings contracted 4.8% year-over-year to 197,022 MT, while North American grindings barely held steady with a gain of just 0.3% year-over-year to 103,117 MT. These lackluster figures across major consuming regions underline that demand destruction remains a primary price headwind.

Inventory Levels Climb, Weighing on the Cocoa Outlook

Physical cocoa stocks at US ports present another challenge to the bulls. After hitting a 10.5-month low of 1.6 million bags in late December, inventories rebounded to 1.78 million bags last week—a 2.5-month peak. The recovery in stored supplies represents a bearish factor, suggesting that supply abundance persists despite the slower shipment pace from Ivory Coast. Higher warehouse levels typically signal that physical demand cannot absorb available inventories, allowing stocks to accumulate.

West African Harvest Prospects and Supportive Signals

On the supply side, some constructive elements are beginning to emerge. Tropical General Investments Group noted that favorable growing conditions across West Africa are expected to support the February-March cocoa harvest in both Ivory Coast and Ghana. Farmer reports indicate that pods are larger and healthier compared to the same period last year, improving the outlook for new-crop supply. Mondelez, the major chocolate manufacturer, provided additional color by noting that current pod counts in West Africa are running 7% above the five-year average and “materially higher” than the prior-year crop.

The main crop harvest in Ivory Coast has commenced, and growers express optimism about quality prospects. This favorable weather backdrop and strong pod development could complicate the price picture by ensuring ample supplies hit the market in coming months—the opposite of what bulls need to sustain any rally.

Nigerian Cocoa Production Concerns Offer Limited Support

Nigeria, the world’s fifth-largest cocoa producer, presents a contrasting supply picture. The country’s cocoa exports declined 7% year-over-year to 35,203 MT in November, signaling weaker shipment momentum. More importantly, Nigeria’s Cocoa Association has projected that 2025/26 production will plunge 11% to 305,000 MT from the prior season’s estimated 344,000 MT. This significant production drop from one of the world’s top producers would provide some support for global cocoa pricing, but the relief is likely offset by robust supplies from Ivory Coast and Ghana.

Longer-Term Supply Picture Remains Contested

The trajectory of global cocoa supplies over the next two seasons continues to invite disagreement among forecasters. StoneX predicted a global surplus of 287,000 MT for the 2025/26 season, with a further 267,000 MT surplus forecast for 2026/27—a stark reversal from the extreme scarcity seen just two years prior. Rabobank recently cut its 2025/26 global surplus estimate to 250,000 MT from a November projection of 328,000 MT, suggesting that some supply tightening is underway. The International Cocoa Organization reported in January that global cocoa stocks rose 4.2% year-over-year to 1.1 MMT, indicating that elevated reserves persist.

The 2024/25 season marked a dramatic turning point for cocoa markets. The ICCO reported that 2024/25 saw a global surplus of 49,000 MT—the first surplus in four years—after cocoa production surged 7.4% year-over-year to 4.69 MMT. This recovery followed the catastrophic 2023/24 season, when production cratered 12.9% to just 4.368 MMT, producing a deficit of 494,000 MT—the largest cocoa deficit in more than 60 years. The shift from severe shortage to comfortable surplus explains much of the downward pressure on cocoa prices in recent months.

Monday’s cocoa rebound, while noteworthy, appears to be a technical correction rather than the start of a sustained rally. Demand weakness, climbing inventories, and the specter of supply abundance in the months ahead present formidable headwinds to any significant price appreciation in cocoa markets.