Global Cocoa Market Struggles With Supply Glut as Demand Continues to Deteriorate

The global cocoa market is caught in a challenging standoff. While prices showed some modest recovery in early March, fundamental pressures remain firmly in place. The core issue is straightforward: the world is producing more cocoa than consumers are willing to buy at current prices, creating a structural oversupply situation that keeps depressing the market despite occasional tactical bounces.

Demand Collapse Remains the Central Market Pressure

The primary drag on cocoa pricing stems from persistently weak demand across all major consuming regions. Chocolate manufacturers have been particularly hard hit, with Barry Callebaut AG—the world’s largest bulk chocolate supplier—reporting a sharp 22% decline in cocoa division sales volume for the quarter ending November 30. The company cited “negative market demand and a prioritization of volume toward higher-return segments” as key factors, signaling that even major players are struggling with cocoa procurement at elevated price levels.

Data from grinding facilities, which process cocoa beans for chocolate and other products, tells a similar story across continents. European cocoa grindings fell 8.3% year-over-year in Q4 to 304,470 metric tons, marking the lowest quarterly performance in 12 years and significantly worse than the anticipated 2.9% decline. Asian grinding activity dropped 4.8% year-over-year to 197,022 MT in the same period. Even North America showed virtually no growth, with grindings rising just 0.3% to 103,117 MT. This synchronized weakness across all major processing centers confirms that demand destruction is a global phenomenon, not a regional anomaly.

The underlying issue reflects consumer pushback against high chocolate prices. With cocoa costs elevated and manufacturers passing these increases through to retail prices, consumers have opted to reduce purchases or switch to less expensive alternatives. This demand elasticity has proven particularly problematic for price recovery.

Supply Surplus Keeps Market Oversupplied

Multiple forecasters project continued oversupply in the cocoa market. StoneX estimates the 2025/26 season will see a global surplus of 287,000 metric tons, with another 267,000 MT surplus expected in 2026/27. Rabobank has revised its 2025/26 surplus forecast to 250,000 MT, down from a November estimate of 328,000 MT but still indicating material excess production relative to consumption.

The International Cocoa Organization (ICCO) reported that global cocoa stocks reached 1.1 MMT in January 2026, representing a 4.2% year-over-year increase. This accumulation of inventory reflects the persistent imbalance between production and demand. After a severe deficit period in 2023/24 (which saw a minus 494,000 MT deficit—the largest in over 60 years), the market swung to a 49,000 MT surplus in 2024/25, marking the first surplus in four years. Global production rebounded 7.4% year-over-year in 2024/25 to reach 4.69 MMT.

Port Delivery Slowdown Triggers Brief Price Bounce

The modest cocoa price recovery observed in early March came on the back of slowing deliveries to Ivory Coast ports. Cumulative shipments through February 1, 2026 reached 1.23 MMT for the current marketing year (October 1, 2025 through February 1, 2026), down 4.7% compared to 1.24 MMT in the equivalent prior-year period. Ivory Coast remains the world’s largest cocoa producer, and any sign of reduced farmer shipments can trigger short-covering activity in futures markets.

ICE NY cocoa futures for March delivery closed up 45 points (1.08%), while London cocoa #7 gained 84 points (2.88%) on the news. However, this recovery represents a tactical reversal rather than a fundamental market turnaround. Prior to this bounce, NY cocoa had dropped to a 2.25-year low, and London cocoa touched a 2.5-year low, reflecting the weight of oversupply and weak demand.

Production Mix: Nigeria Weakens, Ivory Coast Steadies

The supply picture shows important regional variation. Nigeria, the world’s fifth-largest cocoa producer, faces significant headwinds. November cocoa exports fell 7% year-over-year to 35,203 MT. More concerning, Nigeria’s Cocoa Association projects production for the 2025/26 season will decline 11% year-over-year to 305,000 MT from 344,000 MT in the previous crop year. This production decline provides some support to global cocoa prices by tightening the supply outlook.

In contrast, conditions in West Africa’s primary production zones—Ivory Coast and Ghana—remain favorable. Tropical General Investments Group noted that favorable weather patterns are expected to boost the February-March cocoa harvest in both countries. Farmers report larger and healthier cocoa pods compared to the prior year. Mondelez highlighted that the latest cocoa pod count in West Africa runs 7% above the five-year average and is “materially higher” than last year’s yield. With Ivory Coast’s main crop harvest underway and farmers expressing optimism about quality, production momentum in the world’s leading cocoa region appears solid for the near term.

The Path Forward: No Demand Catalyst in Sight

The cocoa market faces a structural mismatch between ample supplies and diminishing consumption. While production challenges in Nigeria and ongoing favorable conditions in West Africa create some price support, these factors are insufficient to overcome the demand deficit. Without a meaningful recovery in chocolate consumption—which requires either price decreases or a shift in consumer preferences—the cocoa market is likely to remain range-bound at depressed levels. The recent price recovery, though welcome for holders of long positions, represents tactical relief rather than the start of a sustained bull market. Recovery will ultimately hinge on whether lower cocoa prices can stimulate sufficient demand to absorb global production and reduce the persistent inventory overhang.