Cocoa Prices Experience Significant Decline

Today, March Ice New York Cocoa (CCH26) fell by 232 points, a drop of 7.19%, while March Ice London Cocoa #7 (CAH26) decreased by 124 points, down 5.47%. This marks the first time in six weeks that cocoa prices have taken such a steep dive, reaching their lowest point in 2.75 years. Buyers in the international market seem hesitant to meet the official prices for cocoa beans sourced from Ivory Coast and Ghana, perhaps due to concerns about further price drops.

Cocoa stocks at ICE have surged to 2,036,385 bags as of Tuesday, the highest they’ve been in five months. This increase in supply appears to stem from a declining interest among buyers.

Interestingly, a weaker British pound has somewhat cushioned cocoa losses in London. The pound fell to a four-week low, which, in a way, supported cocoa prices that are quoted in pounds.

In a notable move, Ghana reduced the official price it pays to cocoa farmers for the upcoming 2025/26 season by nearly 30%. Just a day later, reports surfaced indicating that Ivory Coast might be considering a similar reduction. Together, these two countries account for over half of global cocoa production.

Currently, cocoa prices are under pressure due to a combination of robust global supplies and sluggish demand. Back on January 29, StoneX forecasted a global cocoa surplus of 287,000 tonnes for the 2025/26 season and 267,000 tonnes for the following season. To add to this, the International Cocoa Organization (ICCO) mentioned on January 23 that global cocoa stocks had risen by 4.2% year-on-year, reaching 1.1 million metric tons.

The weakening demand for cocoa is evident, as consumers seem reluctant to purchase high-priced chocolate. Barry Callebaut AG, the largest bulk chocolate producer worldwide, reported a 22% decline in volumes in its cocoa division for the quarter ending November 30, attributing this drop to “negative market demand” and a shift towards more profitable product segments.

Recent grinding reports also point to low demand. The European Cocoa Association revealed that European cocoa crushing volumes fell by 8.3% year-on-year to 304,470 tonnes in the fourth quarter, which exceeded the anticipated decline of 2.9% and marked the lowest figures seen in over a decade. In Asia, the Cocoa Association noted a 4.8% year-on-year dip in cocoa crushing for the same quarter, registering at 197,022 tons. Meanwhile, North America’s cocoa milling stayed relatively stable, inching up 0.3% to 103,117 tons.

On the supply side, favorable growth conditions in West Africa are further undermining cocoa prices. Tropical General Investment Group indicated that harvests in Ivory Coast and Ghana are likely to see an increase in February and March, based on reports of larger, healthier pods compared to last year.

In fact, Mondelez reported that West Africa’s cocoa crop was 7% above the five-year average, and the quality surpasses last year’s yield. Harvesting of Ivory Coast’s main crop has begun, with farmers expressing optimism about the harvest’s quality.

Nigeria, the world’s fifth-largest cocoa producer, is also ramping up exports, which is contributing to the downward pressure on prices. Recent news from Bloomberg showed that Nigeria’s cocoa exports surged by 17% year-on-year in December, reaching 54,799 tonnes.

Interestingly, a slowdown in cocoa shipments to Ivorian ports may be providing some support to prices. Recent data indicates that Ivorian farmers exported 1.30 million metric tons of cocoa to ports in the current marketing year, representing a 3% drop from 1.34 million metric tons during the same period last year.

On a more hopeful note, the Cocoa Association of Nigeria predicts a production of 305,000 tonnes for 2025/26, which is an 11% decline from the previous year’s estimate of 344,000 tonnes.

Furthermore, back in December, the ICCO estimated a global cocoa surplus of 49,000 tonnes for the 2024/25 season, which would be the first surplus seen in four years. The ICCO also projected a 7.4% year-on-year increase in global cocoa production for that same period, bringing it to 4.69 million metric tons. Meanwhile, Rabobank has recently revised its global cocoa surplus forecast for 2025/26 downward to 250,000 tonnes from an earlier estimate of 328,000 tonnes.