Cocoa prices experienced a significant increase today, with March ICE NY cocoa (CCH26) rising by +128 points, or 2.18%, and March ICE London cocoa #7 (CAH26) climbing by +130 points, or 3.07%. The boost in cocoa prices is attributed to indications of a reduced global cocoa surplus. A short covering in cocoa futures also contributed to the price surge, following Citigroup’s recent revision of its 2025/26 global cocoa surplus estimate from 134,000 metric tons (MT) to a lower figure of 79,000 MT.
Supportive factors for cocoa prices include decreasing inventories monitored by ICE, which dropped to a nine-month low of 1,655,457 bags in U.S. ports as of Monday. The impending inclusion of NY cocoa futures in the Bloomberg Commodity Index (BCOM) is also expected to attract significant investment, with Citigroup estimating that up to $2 billion could flow into NY cocoa futures in the early weeks of January.
Contrarily, recent data from the Ivory Coast, the world’s largest cocoa producer, showed an increase in cocoa arrivals at ports. From October 1 to December 14, farmers shipped 895,544 MT of cocoa, a modest rise of 0.2% compared to the same period last year. Despite this, the current rally in cocoa prices, which reached five-week highs last Thursday, is a reaction to a tightening global supply forecast.
The International Cocoa Organization (ICCO) recently lowered its global cocoa surplus estimate for the 2024/25 crop year to 49,000 MT, down from a previous figure of 142,000 MT. They also revised down their global cocoa production forecast to 4.69 million metric tons (MMT) from 4.84 MMT. Similarly, Rabobank adjusted its forecast for the 2025/26 surplus downward to 250,000 MT from 328,000 MT. The expectation of an ample cocoa supply had previously pressured prices, as seen when they fell to the lowest level in 1.75 years on November 19. Reports from cocoa farmers in the Ivory Coast have indicated that the cocoa trees have thrived, aided by dry weather, while farmers in Ghana noted favorable conditions for cocoa pod development. Mondelez reported a higher cocoa pod count in West Africa, which is 7% above the five-year average, signaling potential harvest quality.
The approval of a one-year delay to the European Union’s deforestation law by the European Parliament on November 26 has also affected cocoa prices. This delay allows the continued import of cocoa from regions facing deforestation without additional regulatory pressures, which may help maintain supply levels.
However, weak global demand for cocoa remains a concerning factor. Hershey’s CEO described the company’s Halloween chocolate sales as “disappointing,” signifying a notable decline in industry performance during a key sales period. The Cocoa Association of Asia reported that cocoa grindings in Q3 fell by 17% year-on-year, marking the lowest levels for that quarter in nearly a decade. Similarly, European cocoa grindings saw a decline of 4.8% year-on-year, indicating downward trends in consumption.
Furthermore, production issues in Nigeria, the world’s fifth-largest cocoa producer, are projected to exacerbate supply constraints. The country’s Cocoa Association anticipates an 11% year-on-year reduction in cocoa production for the 2025/26 season. Despite unchanged September cocoa exports of 14,511 MT year-on-year, the challenges within Nigeria represent a significant concern for the global market.
The ICCO indicated a major revision of the 2023/24 global cocoa deficit to -494,000 MT, the worst deficit in over six decades, largely as a consequence of production declines. Conversely, the organization reported positive adjustments in global cocoa production for 2024/25, with an expected increase of 7.4% year-on-year.
Market players will be closely monitoring these developments as they unfold, with fluctuations in cocoa prices reflecting broader trends in supply, demand, and regulatory environments.
