Global Cocoa Prices Decline Sharply: Nigeria and West Africa Navigate Market Pressure

Global cocoa prices have entered a sustained downward phase, with major trading hubs recording their lowest levels in recent years. The shift reflects a complex interplay between weakening demand and robust supplies, reshaping market dynamics for cocoa price forecasts and drawing particular scrutiny on production regions including Nigeria. Industry participants are closely monitoring how supply constraints in key producing nations may eventually provide a counterbalance to current bearish pressures.

Cocoa Futures Contracts Retreat on Reduced Buying Interest

March futures contracts on ICE NY cocoa (CCH26) fell 6.18%, shedding 276 points, while the corresponding March contract on ICE London cocoa #7 (CAH26) dropped 6.57%, down 211 points. This marks the third consecutive week of downward movement, with New York cocoa hitting its lowest point in two years and London cocoa reaching a 2.25-year low.

The primary culprit behind the selloff is subdued consumer demand, as elevated chocolate prices deter buyers from the market. Barry Callebaut AG, the world’s largest supplier of bulk chocolate products, reported a 22% year-over-year decline in cocoa division sales for the quarter ending late November, attributing the weakness to soft market appetite and a strategic shift toward higher-margin cocoa segments.

Demand Slump Across Major Consuming Regions

Consumption trends paint a picture of widespread weakness. The European Cocoa Association documented that fourth-quarter cocoa grindings across Europe contracted 8.3% year-over-year to 304,470 metric tons—sharper than the anticipated 2.9% decline and marking the lowest Q4 performance in 12 years.

Asia’s cocoa utilization also softened, with fourth-quarter grindings in the region declining 4.8% to 197,022 metric tons, per data from the Cocoa Association of Asia. North American grindings showed relative resilience, edging up just 0.3% to 103,117 metric tons, according to the National Confectioners Association. The divergence in regional demand underscores the global nature of chocolate consumption challenges.

The International Cocoa Organization (ICCO) reported that global cocoa inventories expanded 4.2% year-over-year for the 2024/25 season, climbing to 1.1 million metric tons and exerting additional downward pressure on prices.

Nigeria’s Reduced Output Compounded by Elevated Inventories

Supply-side developments add layers of complexity to the cocoa price outlook. Nigeria, the world’s fifth-largest cocoa producer, has seen output diminish in recent months. Cocoa exports from Nigeria in late November declined 7% year-over-year to 35,203 metric tons. More concerning, the Nigerian Cocoa Association forecasts that production for the 2025/26 season will fall 11% to 305,000 metric tons, compared to the projected 344,000 metric tons for 2024/25—a meaningful contraction that could reshape regional supply dynamics.

Meanwhile, favorable weather conditions in West Africa are supporting an expected robust harvest in the February-March period across Ivory Coast and Ghana. Mondelez, a major chocolate producer, reported that the latest cocoa pod count in West Africa stands 7% above the five-year average and substantially higher than the prior year’s crop, providing confidence in near-term harvest volumes.

Ivory Coast, accounting for the largest share of global cocoa production, shipped 1.16 million metric tons of cocoa to ports from October through mid-January, representing a 3.3% decline year-over-year. ICE-monitored cocoa inventories at U.S. ports have rebounded from a 10.25-month low of 1,626,105 bags recorded in late December to a two-month high of 1,752,451 bags as of recent trading, a shift viewed as bearish for sustained price recovery.

Supply Tightening Signals Emerging Amid Production Challenges

Despite the bearish near-term backdrop, emerging data suggests tightening global supply may eventually lend support to cocoa prices. The ICCO revised its 2024/25 global cocoa surplus estimate downward to 49,000 metric tons from 142,000 metric tons previously, and lowered its production forecast for 2024/25 to 4.69 million metric tons from the earlier estimate of 4.84 million metric tons.

Rabobank similarly adjusted its 2025/26 global cocoa surplus projection to 250,000 metric tons from a prior estimate of 328,000 metric tons, signaling conviction that supply will tighten more than previously anticipated. These revisions represent notable recalibrations from the deficit environment of 2023/24, when the ICCO estimated a record -494,000 metric ton shortfall—the largest deficit in six decades. Production for that year totaled just 4.368 million metric tons, reflecting a 12.9% year-over-year contraction.

Regulatory Environment and Long-Term Outlook

On late November 26, the European Parliament approved a one-year postponement of the deforestation law (EUDR), allowing continued commodity imports from regions in Africa, Indonesia, and South America where forest clearing persists. This delay is expected to keep cocoa supply channels ample in the near term, though the regulation will eventually target deforestation-linked imports across key commodities.

The path forward for cocoa prices hinges on whether demand stabilization and supply tightening in major producing regions—particularly Nigeria and West Africa—can provide enough countervailing force to current weakness. Market participants are watching inventory trends and production forecasts closely as early signals of potential price stabilization emerge against the backdrop of structural supply challenges.