Cocoa Market Update
On Wednesday, the market saw cocoa prices continue their downward trend for the first time in two weeks. ICE NY Cocoa (CCH26) closed at -200, reflecting a drop of 4.30%, while March ICE London Cocoa #7 (CAH26) ended at -137, down 4.09%. Both New York and London cocoa prices reached new lows—New York hitting its lowest point in two years and London falling to a 2.25-year low.
Concerns about demand are impacting cocoa prices as consumers shy away from high chocolate costs. Barry Callebaut, the largest bulk chocolate manufacturer globally, reported a 22% decline in volume within its cocoa division for the quarter ending November 30. The company attributed this drop to “negative market demand” and a shift in focus to more profitable segments within cocoa.
The overall cocoa demand remains weak even as prices increase. According to a recent report from the European Cocoa Association, cocoa milling volumes in Europe during the fourth quarter fell by 8.3% from last year, totaling 304,470 tonnes. This was a more significant downturn than the -2.9% that was anticipated and marked the lowest fourth quarter in over a decade. Meanwhile, the Asia Cocoa Association noted that Asia’s cocoa crushing volume also dipped, down by 4.8% year-on-year to 197,022 tonnes. Interestingly, North American cocoa milling held steady at 103,117 tons in the fourth quarter, reflecting a slight increase of 0.3% year-over-year.
Favorable growing conditions in West Africa are further weighing on cocoa prices. Tropical General Investment Group announced that cocoa harvests in Ivory Coast and Ghana are expected to rise during February and March, thanks to better growing conditions, with reports of healthier and larger cocoa pods compared to last year.
Mondelez, another chocolate manufacturer, pointed out that the latest cocoa crop from West Africa was 7% above the five-year average and significantly better than the previous year’s yield. Farmers in Ivory Coast have begun harvesting their main crops and seem optimistic about the quality.
After reaching a 10.25-month low of 1,626,105 bags on December 26, the ICE-managed cocoa stocks held at U.S. ports have risen. As of Wednesday, inventories increased to 1,741,172 bags—the highest in two months—which is a bearish factor for prices.
Moreover, signs indicate a decrease in cocoa supplies from Ivory Coast, the leading global producer. Cumulative data shows that farmers in Ivory Coast shipped 1.16 million metric tons (MMT) of cocoa to ports during the current marketing year (from October 1 to January 18), marking a 3.3% drop from 1.20 MMT for the same time frame last year.
Low cocoa supplies from Nigeria, the fifth largest cocoa producer, also support prices. Nigerian cocoa exports fell by 7% year-on-year in November, totaling 35,203 tons. The Cocoa Association of Nigeria projects a decline in cocoa production for 2025/26 to 305,000 tonnes, a drop of 11% from the expected 344,000 tonnes for the 2024/25 crop year.
The global supply outlook remains tight, further supporting cocoa prices. The International Cocoa Organization (ICCO) recently revised its forecast for the global cocoa surplus in 2024/25 down to 49,000 tonnes from a previous estimate of 142,000 tonnes. Additionally, the projection for global cocoa production has been lowered from 4.84 MMT to 4.69 MMT. Rabobank also adjusted its forecast for global cocoa surplus in 2025/26 to 250,000 tonnes from an earlier estimate of 328,000 tonnes.
In regulatory news, the European Parliament recently approved a one-year extension of deforestation laws, which has contributed to lower cocoa prices while keeping supplies plentiful. This regulation, referred to as EUDR, aims to address deforestation associated with imports of key commodities such as cocoa. The delay in implementing the EUDR allows EU countries to continue sourcing agricultural products from deforestation-affected areas in Africa, Indonesia, and South America.
Lastly, the ICCO indicated a significant global cocoa deficit for 2023/24, projected at -494,000 tonnes, marking the largest deficit in over six decades. Cocoa production for that year is anticipated to decline by 12.9% from the previous year to 4.368 MMT. Conversely, the ICCO envisions a surplus of 49,000 tonnes in 2024/25, the first in four years, with production increasing by 7.4% from the prior year.
