Global Cocoa Supply Abundance Triggers Sharp Pullback in Cocoa Price Today and Beyond

Cocoa prices today experienced a significant downturn on Tuesday, with December contracts on both major exchanges posting substantial losses. ICE New York cocoa (CCZ25) declined 273 points (-4.47%), hitting a 4-week low, while London cocoa (CAZ25) dropped 206 points (-4.73%), touching its lowest level in three weeks. This sharp correction comes after cocoa prices had climbed to 6-week highs the previous Tuesday, marking a notable reversal in market sentiment.

Bumper Crop Prospects Fuel the Selloff

The primary catalyst for the recent weakness in cocoa prices stems from optimistic harvest expectations across West Africa’s major production regions. Farmer reports from Ivory Coast indicate robust tree health and ideal drying conditions following recent dry spells. Ghana’s agricultural situation similarly points to favorable growing conditions accelerating pod development. These positive signals have emboldened market participants to reassess supply forecasts upward.

Mondelez, a leading chocolate manufacturer, recently disclosed that West African cocoa pod counts stand 7% above their 5-year average, with levels materially exceeding the prior year’s harvest. The Ivory Coast, responsible for the world’s largest cocoa supply, is initiating its main harvest season with farmer sentiment tilted toward quality expectations.

Demand Deterioration Adds Downward Pressure

Compounding supply abundance concerns, global cocoa demand indicators paint a decidedly bearish picture. Hershey’s management noted disappointing chocolate sales performance during the critical Halloween shopping period, which typically accounts for nearly 18% of annual US confectionery sales.

Regional grinding data underscores weakening consumption momentum. Asia’s cocoa grindings contracted 17% year-over-year to 183,413 metric tons during Q3, representing the smallest third-quarter processing volume in nine years according to the Cocoa Association of Asia. European cocoa grindings fell 4.8% year-over-year to 337,353 MT in Q3, marking a 10-year low for that quarter. North American chocolate candy sales volume plummeted more than 21% in the 13-week period ending September 7 compared to the prior year, per Circana research.

Mixed Signals on Supply Flow

Export momentum from Ivory Coast has moderated, introducing a contrarian factor. Government data revealed that farmers shipped 411,979 MT to ports from October 1 through November 8, down 9% from 454,624 MT in the equivalent prior-year period. This slowdown offers marginal price support amid otherwise bearish fundamentals.

Financial Positioning and Technical Levels

Fund managers have significantly expanded short positioning in London cocoa to 19,194 contracts—the highest level in over four years—according to the latest Commitment of Traders report dated November 4. Such concentrated bearish positioning could theoretically provide fuel for short-covering rallies, though near-term momentum remains weighted toward further price weakness.

Long-Term Supply-Demand Imbalance

The International Cocoa Organization previously documented a historic deficit of 494,000 MT in 2023/24, the most severe shortfall in over 60 years, with global stocks-to-grindings ratios declining to a 46-year minimum of 27.0%. However, ICCO’s projections for 2024/25 anticipate a reversal to surplus territory at 142,000 MT—the first surplus in four years—supported by 7.8% year-over-year global production growth to 4.84 MMT.

Nigeria, the world’s fifth-largest cocoa producer, provides limited counterweight to abundance concerns. The Nigerian Cocoa Association projects 2025/26 production will slide 11% year-over-year to 305,000 MT from the 344,000 MT expected for 2024/25.

Structural Support Remains Limited

ICE warehouse inventories held in US ports have declined to 1,786,616 bags, a 7.5-month low that offers modest price underpinning. Additionally, passive fund inflows tied to cocoa’s inclusion in the Bloomberg Commodity Index beginning January 2025 could inject approximately $1.9 billion into futures markets over the next 80 days, though such flows remain dependent on broader risk sentiment.

The current cocoa price environment reflects a collision between abundant near-term supply prospects and tepid global demand, with longer-term positioning and index rebalancing providing the only meaningful bullish counterbalance to structural headwinds.