Global Cocoa Market Posts First Surplus in Four Years at Forty-Nine Thousand Metric Tons

Cocoa prices are in freefall as buyers worldwide withdraw from chocolate consumption amid record-high valuations. The March contract for New York cocoa on ICE traded down 189 points, reflecting a 4.07% decline, while London’s March contract fell 130 points or 3.88%. These losses extend a two-week downturn, with both contracts hitting their lowest levels in approximately two years, signaling a dramatic reversal in market sentiment.

Consumer Resistance Creates Demand Crisis

Chocolate demand has collapsed under the weight of elevated prices, forcing major manufacturers to reassess their purchasing strategies. Barry Callebaut AG, which controls the world’s cocoa chocolate processing market, disclosed a staggering 22% drop in sales volume within its cocoa division during the quarter concluding November 30. The company attributed the decline to “negative market demand and a prioritization of volume toward higher-return segments within cocoa,” indicating that consumers are simply unwilling to pay current prices for premium chocolate products.

Regional grinding data confirms demand deterioration across all major markets. The European Cocoa Association reported that fourth-quarter European cocoa grindings contracted 8.3% year-over-year to 304,470 metric tons—a significant miss versus the anticipated 2.9% decline and the weakest Q4 performance in more than a decade. Asia’s fourth-quarter cocoa grindings also disappointed, falling 4.8% year-over-year to 197,022 metric tons according to the Cocoa Association of Asia. Even North America showed minimal growth, with the National Confectioners Association logging just a 0.3% year-over-year increase to 103,117 metric tons.

West Africa’s Harvest Boom Pressures Market Balance

Favorable weather conditions across West Africa are expected to deliver a robust harvest, adding considerable downward pressure on prices. Farmers in the Ivory Coast and Ghana are reporting larger, healthier cocoa pods compared to the previous year’s season. Tropical General Investments Group recently highlighted these improving conditions and anticipates a stronger February-March harvest window in both nations.

Mondelez, a major global chocolate manufacturer, noted that current cocoa pod counts in West Africa are running 7% above the five-year average and significantly higher than the previous year’s crop. The Ivory Coast, responsible for generating the world’s largest cocoa supply, has begun harvesting its primary crop, with farmers expressing optimism regarding quality prospects.

However, cumulative shipping data suggests some tempering of supply euphoria. Through January 18 of the current marketing year (which began October 1), Ivory Coast farmers shipped 1.16 million metric tons to ports—a 3.3% decrease from 1.20 million metric tons in the equivalent period last year. Nigeria, the world’s fifth-largest cocoa producer, is also facing production headwinds. November exports tumbled 7% year-over-year to 35,203 metric tons, while Nigeria’s Cocoa Association projects that 2025/26 production will decline 11% year-over-year to 305,000 metric tons from an estimated 344,000 metric tons in 2024/25.

Market Inventory Levels Signal Stabilization

U.S. port inventories recently declined to a 10.25-month low of 1,626,105 bags on December 26, providing brief psychological support to the market. However, inventory levels subsequently rebounded to 1,726,441 bags—a level approaching a 1.75-month high—indicating that supply pressures are easing.

The Turning Point: Forty-Nine Thousand Metric Tons Marks Historic Shift

The International Cocoa Organization (ICCO) fundamentally reshaped market expectations on December 19 when it projected a global cocoa surplus of forty-nine thousand metric tons for the 2024/25 season. This estimate represents a dramatic revision from ICCO’s November forecast of 142,000 metric tons surplus, and more significantly, it marks the first surplus in four consecutive years.

This market inflection is historic. ICCO’s May 30 report had estimated a catastrophic deficit of 494,000 metric tons for 2023/24—the largest supply shortfall in over six decades. The organization then reported that 2023/24 cocoa production contracted 12.9% year-over-year to 4.368 million metric tons, creating one of the most severe supply crises in commodity history.

The 2024/25 season tells a starkly different story. Global cocoa production is projected to rise 7.4% year-over-year to 4.69 million metric tons, according to ICCO’s latest assessment. Rabobank reinforced this tightened surplus outlook last Tuesday by reducing its 2025/26 global surplus projection to 250,000 metric tons from its November forecast of 328,000 metric tons, though this remains substantially higher than the forty-nine thousand metric tons estimated for 2024/25.

Policy Shifts Provide Additional Supply Relief

On November 26, the European Parliament approved a one-year postponement of the European Union Deforestation Regulation (EUDR), providing welcome relief to cocoa-producing regions and major suppliers. The EUDR legislation targets agricultural deforestation in nations whose exports supply key EU markets, including cocoa-producing countries in West Africa, Indonesia, and South America. By delaying implementation, the EU permits continued imports from regions experiencing ongoing deforestation pressures, effectively keeping potential cocoa supplies ample rather than constrained by stricter environmental standards.

This regulatory reprieve represents another factor weighing on prices, as markets reassess the likelihood of future supply disruptions stemming from environmental compliance measures.

Market Outlook

The cocoa market stands at a crossroads. While buyer demand remains severely depressed by pricing, global supply dynamics have shifted decisively toward abundance. The transition from a historic four-year deficit cycle to the first surplus projection—now quantified at forty-nine thousand metric tons—reflects a fundamental market rebalancing. Whether this newly projected balance can stabilize prices or whether further demand erosion will test even lower price levels remains the critical question for all market participants.