Cocoa Prices Dip Amid Demand Concerns
Cocoa prices took a hit on Friday, marking their first decline in two weeks. The New York cocoa market dropped to a two-year low, while London cocoa reached a 2.25-year low. This downturn seems largely tied to worries about demand; consumers are hesitating due to high chocolate prices. Barry Callebaut AG, the leading global supplier of bulk chocolate, reported a significant 22% dip in its cocoa division volume for the quarter ending November 30, attributing this drop to low market demand and a shift toward more profitable cocoa segments.
Adding to the pressure is a report from the International Cocoa Organization (ICCO) indicating that global cocoa stocks for 2024/25 increased by 4.2% year-on-year, reaching 1.1 million metric tons. It’s a paradox: while demand remains sluggish, our supplies seem plentiful. For instance, the European Cocoa Association revealed that cocoa milling in Europe fell drastically by 8.3% year-on-year in the fourth quarter, hitting 304,470 tonnes—the largest decrease in 12 years. Meanwhile, Asia’s cocoa crushing volumes also saw a drop of 4.8% to 197,022 tonnes. Interestingly, North America managed a slight increase, with milling volume staying at 103,117 tons, a growth of 0.3% from the previous year.
Conditions in West Africa are playing a role in these trends. Tropical General Investment Group recently shared that the cocoa harvests in Ivory Coast and Ghana are expected to rise in the upcoming months, bolstered by favorable weather. Farmers have reported healthier and larger pods compared to last year.
Mondelez, a prominent chocolate producer, noted that the cocoa crop from West Africa is 7% above the five-year average and significantly better than last year’s yield. Harvests in Ivory Coast are underway, with farmers expressing optimism about the quality of their cocoa.
U.S. cocoa stocks, which fell to a 10.25-month low of 1,626,105 bags on December 26, have rebounded to 1,752,451 bags, the highest in two months. This surplus is an additional factor contributing to lower prices. However, there’s some support from the Ivory Coast, where cocoa shipments fell by 3.3% this year, totaling 1.16 million metric tons from October 1 to January 18. Being the largest cocoa producer globally, the Ivory Coast’s supply trends are closely watched.
Nigeria, as the fifth-largest producer, also influences the market. Its cocoa exports dropped 7% year-on-year in November, amounting to 35,203 tons. The Cocoa Association of Nigeria anticipates a decline in production for 2025/26 to 305,000 tonnes, down from an earlier estimate of 344,000 tonnes for the current crop year.
Looking ahead, the global supply situation appears tight. On November 28, the ICCO revised its forecast for the cocoa surplus in 2024/25 drastically, lowering it to 49,000 tonnes from 142,000 tonnes. Additionally, global production estimates for that period have been reduced from 4.84 million to 4.69 million metric tons. Similarly, Rabobank also adjusted its outlook—now predicting a 250,000-ton surplus for the 2025/26 year, down from 328,000 tonnes.
Compounding these factors, a recent decision by the European Parliament to extend deforestation laws has kept cocoa prices low. The EUDR aims to address deforestation linked to commodities like cocoa, allowing continued imports from certain regions where deforestation is an ongoing issue.
Back in May, the ICCO updated its estimates, declaring a global cocoa deficit for 2023/24 of 494,000 tonnes, the biggest in over six decades. They also highlighted a projected surplus of 49,000 tonnes for 2024/25—a welcome turnaround after several years of deficits—and an expected production increase of 7.4% for that same year.
