Cocoa Market Faces Perfect Storm: Barchart Analysis Reveals Oversupply Crisis Amid Collapsing Demand

Recent market data shows the cocoa sector grappling with a convergence of negative pressures that have sent prices spiraling downward. On February 16, 2026, March ICE NY cocoa futures closed down 95 points (-2.26%), while March ICE London cocoa declined 94 points (-3.08%), reflecting the intensity of selling pressure across global markets. According to Barchart’s comprehensive market analysis, this downturn stems from a structural imbalance between record-high supplies and rapidly declining consumption, creating what appears to be a prolonged bearish environment for cocoa traders and industry participants.

Global Supply Surge Overwhelms Cocoa Prices

The fundamental driver of the recent cocoa selloff is a dramatic shift in the global supply-demand equilibrium. On January 30, NY cocoa futures reached a 2.25-year low, while London cocoa touched a 2.5-year low, as market participants absorbed forecasts of substantial surpluses ahead. StoneX, in its latest projections, estimates a global cocoa surplus of 287,000 MT for the 2025/26 season, with an additional 267,000 MT surplus expected in 2026/27—signaling years of excess inventory ahead.

The International Cocoa Organization (ICCO) confirmed this pessimistic outlook in late January, reporting that worldwide cocoa stocks surged 4.2% year-over-year to 1.1 million metric tons. This accumulation represents a structural headwind for prices, as the typical seasonal patterns that once supported cocoa futures have been disrupted by the sheer volume of global inventories.

Chocolate Manufacturers Retreat as Consumer Demand Collapses

Perhaps the most alarming development for cocoa bulls has been the sharp deterioration in end-user demand. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, disclosed a startling 22% decline in cocoa division sales volume for the quarter ending November 30, citing “negative market demand and a prioritization of volume toward higher-return segments.” This pullback from the industry’s heavyweight signals a structural shift in chocolate consumption patterns.

Regional grinding reports paint an equally bleak picture. The European Cocoa Association reported that Q4 European cocoa grindings plummeted 8.3% year-over-year to 304,470 MT—substantially worse than the anticipated -2.9% decline and marking the weakest Q4 in 12 years. Asia also experienced weakness, with Q4 Asian cocoa grindings sliding 4.8% year-over-year to 197,022 MT, according to the Cocoa Association of Asia. North America provided only marginal support, with the National Confectioners Association reporting a meager +0.3% year-over-year increase to 103,117 MT in Q4 grindings.

Record Inventories Add Fresh Pressure on Cocoa Futures

The inventory backdrop continues to deteriorate as traders and merchants hold unprecedented stock levels. ICE-monitored cocoa inventories reached a 3.25-month high of 1,812,564 bags on February 16, exerting relentless downward pressure on prices. This surge in stored supplies indicates that the market is actively rejecting higher price levels, with commercial participants choosing to liquidate rather than accumulate positions.

Adding to the supply concern, deliveries from the Ivory Coast—the world’s largest cocoa producer—have slowed. As of February 8, 2026, Ivory Coast farmers shipped 1.27 million metric tons to ports during the current marketing year (October 1, 2025, through February 8, 2026), representing a 3.8% decline compared to 1.32 MMT in the same period a year ago. While this slowdown offers modest price support, it has proven insufficient to counteract the overwhelming weight of excess global supply.

West African Harvest Brings Mixed Signals

The upcoming West African harvest season introduces both risks and limited opportunities for price stabilization. Tropical General Investments Group recently highlighted that favorable growing conditions across West Africa are expected to boost the February-March cocoa harvest in the Ivory Coast and Ghana, with farmers reporting larger and healthier pods compared to the prior-year period. Chocolate manufacturer Mondelez amplified these concerns, noting that the latest cocoa pod count in West Africa stands 7% above the five-year average and “materially higher” than last year’s crop.

However, there is one bright spot in the supply landscape: Nigeria, the world’s fifth-largest cocoa producer, is experiencing production headwinds. Nigeria’s cocoa exports fell 7% year-over-year in November to 35,203 MT, and the Nigeria Cocoa Association projects a significant 11% year-over-year decline in the nation’s 2025/26 cocoa production, falling to 305,000 MT from a projected 344,000 MT in the prior season. This supply tightening from Nigeria provides modest support but remains insufficient to offset the glut elsewhere.

Historical Context and Market Turning Points

The current oversupply crisis represents a dramatic reversal from the deficit conditions that characterized the market just months ago. The International Cocoa Organization previously reported a record-setting global cocoa deficit of 494,000 MT in 2023/24—the largest deficit in over 60 years—driven by a 12.9% year-over-year production decline to 4.368 MMT. By December 2024, however, ICCO projected a modest 49,000 MT surplus for 2024/25, marking the first surplus in four years, with global production rebounding 7.4% year-over-year to 4.69 MMT.

The recovery in production, combined with the collapse in chocolate demand, has created the current untenable supply situation. Rabobank recently slashed its 2025/26 cocoa surplus forecast to 250,000 MT from a November estimate of 328,000 MT, suggesting that even conservative projections envision substantial excess supply. For traders following Barchart’s market analysis platforms, this data paints a clear picture: cocoa prices face sustained pressure until consumption patterns stabilize and global inventory levels normalize—developments that appear unlikely in the near term.

The convergence of structural oversupply, demand destruction, and record inventories has established a powerful bearish regime in cocoa markets that will likely persist until fundamental conditions shift materially.