On Tuesday, cocoa prices on the March ICE NY Cocoa (CCH26) rose by 181 points, or 3.17%, while March ICE London Cocoa #7 (CAH26) increased by 133 points, or 3.23%. This uptick marks the continuation of a two-week rise, reaching a three-and-a-half week high, fueled by expectations that the global cocoa surplus will be less than initially anticipated.
On November 28, the International Cocoa Organization (ICCO) revised its projection for the global cocoa surplus in 2024/25 down to 49,000 tonnes, a significant cut from the earlier estimate of 142,000 tonnes. They also lowered the forecast for cocoa production in that year to 4.69 million metric tonnes (MMT), down from 4.84 MMT. Rabobank made similar cuts, adjusting its forecast for the global cocoa surplus in 2025/26 to 250,000 tonnes, lower than the 328,000 tonnes they had suggested back in November.
The futures market is also showing strength. Starting in January, New York cocoa will be part of the Bloomberg Commodity Index (BCOM), which is expected to attract additional investment—up to $2 billion in purchases during its first week, according to estimates from Citigroup. This could encourage passive commodity funds to buy into New York cocoa futures.
Supporting cocoa prices further is the drop in ICE cocoa stocks. As of Tuesday, the stockpile monitored by ICE at U.S. ports reached an 8.75-month low at 1,672,131 bags.
Additionally, there’s a decline in cocoa being shipped to Ivorian ports. During the current marketing year, from October 1 to December 7, farmers in Ivory Coast exported 804,288 tonnes of cocoa, which represents a decrease of 1.8% from last year’s figure of 819,425 tonnes for the same period. Notably, Ivory Coast is the leading cocoa producer globally.
However, there’s a contrasting bearish trend in West Africa where favorable weather conditions are likely to improve yields and increase supply. Farmers in Ivory Coast have noted that the weather—a mix of rain and sunshine—is benefiting the flowering of cocoa trees. Similarly, farmers in Ghana have mentioned that regular rains are helping with the development of cocoa trees and pods as they gear up for the harmattan season.
The outlook for abundant global cocoa supplies is also weighing on prices. On November 19, prices hit their lowest levels in 1.75 years amidst expectations for a bumper crop in West Africa. Reports indicate that cocoa trees in Ivory Coast are flourishing, partly helped by a period of dry weather that facilitated bean drying. Meanwhile, Ghanaian cocoa farmers have observed that their beans are maturing more quickly thanks to favorable conditions.
Mondelez, a chocolate manufacturer, recently noted that the latest cocoa crop from West Africa was 7% above the five-year average and significantly better than last year’s output. Harvesting of the main crops in Ivory Coast has just commenced, and the farmers are feeling optimistic about the quality.
On November 26, the European Parliament approved a one-year extension of deforestation regulations, which has contributed to decrease in cocoa prices and an overall abundance of cocoa supplies. The EU regulation, known as EUDR, aims to address deforestation issues in countries supplying key commodities, including cocoa. This extension allows EU nations to continue importing agricultural goods from regions experiencing deforestation in Africa, Indonesia, and South America.
Meanwhile, on November 14, cocoa prices dropped following the announcement from the Trump administration that it would end a 10% reciprocal tariff on non-U.S. goods like cocoa, as well as a 40% tariff on food imports from Brazil, a nation among the top 10 cocoa producers worldwide.
Weak global cocoa demand is also impacting prices negatively. On October 30, the CEO of Hershey pointed out that chocolate sales during this year’s Halloween season were disappointing, as this holiday typically accounts for almost 18% of annual U.S. candy sales. Data from the Asia Cocoa Association revealed a 17% decrease in cacao crushing volume in Asia for the third quarter compared to the previous year, marking the lowest level in nine years. Similarly, the European Cocoa Association noted a year-on-year decrease of 4.8% in European cocoa crushing volumes for the same period, marking the lowest for a third quarter in a decade. However, it was noted that North American cocoa milling volume gained 3.2% year-on-year to 112,784 tons in the third quarter, though the addition of new reporting companies may have affected this number. In contrast, North American chocolate candy sales plummeted over 21% in the 13 weeks ending September 7 compared to the same timeframe last year, according to Circana.
On the production front, a decline in cocoa yield from Nigeria, the world’s fifth-largest cocoa producer, is a contributing factor supporting cocoa prices. The Cocoa Association of Nigeria projects that the country’s cocoa production will decrease to 305,000 tonnes in 2025/26, down from 344,000 tonnes estimated for the 2024/25 crop year. In related statistics, Nigeria’s cocoa exports in September remained steady year-on-year at 14,511 tonnes.
On May 30, ICCO revised the global cocoa deficit for 2023/24 to a staggering -494,000 tonnes, the largest deficit seen in over 60 years. It reported a 12.9% decrease in cocoa production from the previous year to 4.368 MMT and noted that the global cocoa stock-to-crushed ratio for 2023/24 has dropped to 27.0%, the lowest observed in 46 years. Recently, on Friday, ICCO estimated the global cocoa surplus for 2024/25 will rise to 49,000 tonnes, marking the first surplus in four years, alongside a projected increase in global cocoa production of 7.4% year-on-year to 4.69 MMT.
