London Cocoa and Global Futures Hit Multi-Year Lows Amid Supply Surge and Demand Weakness

Global cocoa markets extended their six-week retreat on Thursday, with London cocoa futures falling sharply as inventory levels climbed to five-month highs. The selloff reflects a fundamental mismatch between robust global supplies and slumping chocolate demand, creating significant headwinds for producers in West Africa.

Price Declines Accelerate Across Major Exchanges

March ICE New York cocoa dropped 258 points (-8.00%), while London cocoa futures fell 140 points (-6.17%), extending price pressure to multi-year lows. International cocoa buyers have grown increasingly reluctant to purchase beans from the Ivory Coast and Ghana at official pricing levels, citing mounting concerns that further price declines are inevitable.

The weakness proved somewhat persistent on London cocoa exchanges due to depreciation in the British pound, which temporarily cushioned losses for traders holding sterling-denominated positions. However, this technical support proved insufficient to reverse the broader downtrend affecting the commodity globally.

Inventory Buildup Signals Persistent Supply Pressure

Cocoa inventories surged to their highest levels in five months, reaching 2,065,040 bags as of mid-week. This buildup stems directly from buyer hesitation, as purchasers delay commitments in hopes of securing lower prices in coming weeks.

Major cocoa-producing nations have begun responding to market weakness by adjusting official pricing structures. Ghana recently cut the prices it pays farmers by nearly 30% for the 2025/26 growing season. Reuters reported that the Ivory Coast is considering similar reductions to its farmer compensation. These two nations collectively supply over half of the world’s cocoa, making their policy shifts critical to market dynamics.

Multiple forecasters have signaled that surplus conditions will persist. StoneX projected a global cocoa surplus of 287,000 metric tons for the 2025/26 season, with an even larger 267,000 metric ton surplus expected for 2026/27. The International Cocoa Organization previously estimated a 49,000 metric ton surplus for 2024/25, the first surplus year in four years, and reported that global cocoa stocks climbed 4.2% year-over-year to 1.1 million metric tons.

Chocolate Demand Faces Structural Headwinds

The demand side of the cocoa equation has deteriorated meaningfully, as chocolate consumers continue to resist premium pricing on finished goods. Barry Callebaut AG, the world’s largest industrial chocolate manufacturer, reported a 22% volume decline in its cocoa division for the quarter ending November 30. The company attributed the decline to “negative market demand and a prioritization of volume toward higher-return segments within cocoa.”

Cocoa grinding reports—a key indicator of demand—paint a similarly bleak picture. European cocoa grindings in Q4 fell 8.3% year-over-year to 304,470 metric tons, significantly worse than the anticipated 2.9% decline and representing the weakest Q4 performance in 12 years. Asian cocoa grindings also contracted, dropping 4.8% year-over-year to 197,022 metric tons. North American grindings barely held ground, rising just 0.3% year-over-year to 103,117 metric tons.

Favorable Growing Conditions and Rising Exports Add to Bearish Mix

West African growing conditions have turned supportive for farmers but negative for cocoa prices. Tropical General Investments Group noted that favorable weather in West Africa is expected to boost the February-March harvest in the Ivory Coast and Ghana, with farmers reporting larger and healthier cocoa pods compared with year-ago levels. Chocolate manufacturer Mondelez reported that the latest pod count in West Africa stands 7% above the five-year average and materially exceeds last year’s crop volume.

The Ivory Coast has begun harvesting its main crop, and farmer sentiment remains optimistic regarding quality, suggesting that production volumes should remain robust. Nigeria, the world’s fifth-largest cocoa producer, has further pressured prices through rising exports. Bloomberg reported that Nigerian cocoa exports climbed 17% year-over-year to 54,799 metric tons in December, adding to global supply pressures.

A modest counterweight to these bearish factors emerged from slowing deliveries to Ivory Coast ports. Recent cumulative data showed that Ivorian farmers shipped 1.30 million metric tons of cocoa to ports during the current marketing year (October 1, 2025 through mid-February), down 3.0% from 1.34 million metric tons in the comparable prior-year period. Additionally, Nigeria’s Cocoa Association projects that Nigerian production will fall 11% year-over-year to 305,000 metric tons in 2025/26, down from 344,000 metric tons in the previous crop year.

Market Outlook: Oversupply Likely to Persist

The consensus view among major commodity forecasters envisions persistent oversupply conditions. Rabobank recently revised its 2025/26 surplus estimate downward to 250,000 metric tons from a November forecast of 328,000 metric tons, though even this scaled-back projection still signals meaningful excess supplies. The International Cocoa Organization’s earlier 2024/25 production estimate of 4.69 million metric tons represented a 7.4% year-over-year increase, establishing a baseline of structural abundance in global cocoa markets.

For London cocoa and global futures markets, this combination of record inventories, weak demand signals, and supportive growing conditions suggests that downward price pressure is likely to remain a defining market characteristic in coming months. Producers and market participants should prepare for an extended period of supply-driven price pressure as the market works to rebalance.