Cocoa Pods, Healthier Harvests, Yet Cocoa Prices Continue Their Descent

Recent cocoa market action paints a paradoxical picture: conditions for growing cocoa pods have improved significantly across West Africa, crop forecasts are robust, and inventories are climbing. Yet prices keep falling. In late February, ICE NY cocoa and ICE London cocoa both posted fresh lows—NY cocoa hitting a 2.75-year low while London cocoa registered its weakest levels in nearly three years. This seven-week downtrend reflects a market overwhelmed by ample supplies and tepid buyer interest.

A Glut of Cocoa Overwhelming Markets

The supply situation has become a central headwind for prices. Global cocoa stockpiles are swelling at an accelerating pace. According to the International Cocoa Organization (ICCO) data from late January, worldwide cocoa stocks rose 4.2% year-over-year to 1.1 million metric tons. On the exchange, ICE cocoa inventories ballooned to a 5.5-month peak of just over 2.1 million bags in late February, keeping downward pressure on prices.

Forecasters are projecting massive oversupply through the 2026/27 season. StoneX predicted a 287,000 MT surplus for the current 2025/26 season, with an even larger 267,000 MT surplus expected in 2026/27. More recently, Rabobank adjusted its 2025/26 surplus estimate to 250,000 MT, down from an earlier forecast but still indicating significant excess supply relative to demand.

Adding to the pressure, major cocoa producers have cut official farm-gate prices. Ghana slashed prices paid to cocoa farmers by nearly 30% for the 2025/26 season, and the Ivory Coast announced plans for a comparable 35% reduction starting with the mid-crop harvest in April. Yet even with lower prices, international buyers are hesitant to purchase, suggesting demand destruction is running deeper than price cuts alone can address.

Chocolate Makers Push Back on Cost

Demand remains exceptionally weak across all major consuming regions. Global chocolate makers and industrial chocolate processors have been explicit about their reluctance to buy at current market levels. Barry Callebaut AG, which processes roughly one-quarter of the world’s cocoa supply, reported a 22% drop in sales volume for its cocoa division in the quarter ending November 30, citing “negative market demand” and a strategic pivot toward higher-margin products.

Cocoa grinding data—a proxy for industrial demand—has been consistently disappointing. European cocoa grindings in Q4 fell 8.3% year-over-year to 304,470 MT, marking the worst performance for a fourth quarter in a dozen years and significantly worse than the expected 2.9% decline. Asian grindings declined 4.8% year-over-year, while North American grindings managed only a fractional 0.3% gain. The message is clear: consumers worldwide are resisting higher chocolate prices, and chocolate manufacturers are responding by cutting production and shifting toward premium segments.

Cocoa Pods and Favorable Conditions Boost Production Prospects

Despite the demand crisis, growing conditions in West Africa have turned decidedly positive, setting the stage for record harvests. Chocolate manufacturer Mondelez recently reported that the current cocoa pod count in the region stands approximately 7% above the five-year average and materially higher compared to the prior year. Farmers across the Ivory Coast and Ghana are reporting larger, healthier cocoa pods and pods with improved vitality, which typically translates to higher yields during the upcoming harvest phases.

Tropical General Investments Group echoed this optimism, noting that favorable weather patterns are expected to drive a more robust February-March harvest in both Ivory Coast and Ghana. The Ivory Coast’s main crop harvest has already commenced, and farmer sentiment regarding both volume and quality has shifted decidedly positive.

Production Trends: A Tale of Two Outcomes

Looking ahead, production forecasts present a mixed but ultimately supply-heavy picture. The Ivory Coast and Ghana—together responsible for more than half of global cocoa output—project divergent trends. Ivory Coast cocoa production is forecast to slide 10.8% year-over-year to 1.65 million MT in 2025/26, down from 1.85 million MT in the prior season. However, this decline is smaller than might have been expected given recent price weakness, and farmers there remain optimistic about the main crop now underway.

Nigeria, the world’s fifth-largest cocoa producer, is also seeing production pressures. The Nigerian Cocoa Association projects output will fall 11% year-over-year to 305,000 MT for the 2025/26 season, compared to 344,000 MT estimated for 2024/25. Yet Nigerian cocoa exports jumped 17% year-over-year to 54,799 MT in December, suggesting traders are front-running anticipated lower supplies ahead.

The ICCO estimated a 49,000 MT global surplus for 2024/25, marking the first surplus in four years, with global production climbing 7.4% year-over-year to 4.69 million MT.

What Comes Next for Cocoa Markets?

The cocoa market faces a genuine disconnect between near-term supply conditions and structural demand weakness. While cocoa pods are healthier and more abundant than in recent years, and supplies remain plentiful, the margin call from chocolate producers and consumers is cutting demand at a pace that exceeds any typical seasonal recovery. Prices have nowhere to go but down until either (a) demand stabilizes from current depressed levels or (b) production disruptions emerge in major growing regions.