Cocoa Supply Tightening Amid Mixed Signals: Ghana's Role in Global Production Balance

Global Supply Outlook Shifts Dramatically

The International Cocoa Organization (ICCO) has reshaped expectations for the cocoa market, slashing its 2024/25 global surplus estimate to just 49,000 MT—down sharply from an earlier projection of 142,000 MT. This substantial downward revision reflects underlying supply constraints that are becoming increasingly evident across major producing regions.

Global cocoa production for 2024/25 is now estimated at 4.69 MMT, down from the previously forecasted 4.84 MMT. This marks a significant production contraction compared to last season’s deficit-plagued output of 4.368 MMT, which had created the largest cocoa shortage in over 60 years. While current year production shows recovery, the supply cushion remains razor-thin.

Port Arrivals Point to Supply Pressure in Ivory Coast

The Ivory Coast, accounting for roughly one-third of global cocoa supply, is experiencing a notable slowdown in port deliveries. During the week ending December 28, farmers delivered 59,708 MT to ports—a 27% year-over-year decline. This trend extends to the cumulative new marketing season (October 1 through December 28), which saw 1.029 MMT shipped, down 2% from the prior-year comparable.

These arrival metrics underscore the precarious balance between anticipated production levels and actual deliveries, suggesting that supply tightness may persist throughout the marketing year.

Ghana’s Cultivation Environment and Regional Weather Dynamics

Ghana, the world’s second-largest cocoa producer, continues to benefit from favorable agronomic conditions that are shaping cocoa cultivation outcomes. The region has experienced a beneficial mix of rainfall and sunshine, conditions that are supporting cocoa tree flowering and pod development. Such weather patterns are crucial ahead of the approaching harmattan season, which typically brings drier conditions.

According to chocolate manufacturer Mondelez, the latest pod count across West Africa stands 7% above the five-year average and materially higher than the previous season’s yield. This positive indicator suggests that the foundation for harvest quality may be stronger than feared, though final crop outcomes remain subject to seasonal completion.

Demand Weakness Pressuring Price Discovery

Counterbalancing supply tightness are concerning signals from demand centers globally. Asian cocoa grindings in Q3 fell 17% year-over-year to 183,413 MT—the smallest quarterly volume in 9 years, according to the Cocoa Association of Asia. European grindings contracted 4.8% to 337,353 MT, marking the lowest third-quarter volume in a decade.

North American grindings rose 3.2% year-over-year to 112,784 MT, though this gain was reportedly inflated by the addition of new reporting entities to the dataset. The broad-based weakness in processing activity across major chocolate manufacturing hubs signals constrained end-user demand and potential margin pressure on cocoa processors.

Nigerian Production Facing Headwinds

Nigeria, the world’s fifth-largest cocoa producer, is expected to see production decline. The Nigerian Cocoa Association projects 2025/26 output will slide 11% to 305,000 MT from 344,000 MT in the current crop year. September cocoa exports remained flat year-over-year at 14,511 MT, suggesting persistent structural challenges in Nigeria’s production cycle.

Market Mechanics and Index Dynamics

Index-related flows are beginning to influence cocoa market structure. The addition of cocoa futures to the Bloomberg Commodity Index (BCOM) beginning January represents a structural shift, with Citigroup estimating potential inflows of approximately $2 billion into NY cocoa futures contracts. Such flows could support price levels independent of fundamental considerations.

Separately, ICE-monitored cocoa inventory levels at US ports declined to a 9.5-month low of 1,626,105 bags last Friday, further underscoring constrained supply availability in key distribution centers.

Policy Environment: The EUDR Delay Impact

The European Parliament’s November 26 decision to delay the deforestation regulation (EUDR) by one year removes near-term supply-chain uncertainty. The EUDR was designed to restrict EU imports of cocoa and other commodities from deforestation-prone regions in Africa, Indonesia, and South America. The postponement allows continued import flows from these regions, effectively easing supply concerns that had supported prices earlier in the cycle.

Recent Price Action and Technical Positioning

March ICE NY cocoa closed Tuesday down 179 points (-2.87%), while March ICE London cocoa fell 126 points (-2.80%). Tuesday’s decline reversed a portion of Monday’s gains as dollar strength—with the dollar index reaching a 1-week high—triggered long liquidation activity in cocoa futures contracts.

The price weakness follows Monday’s rally to 2-week highs, which had been underpinned by concerns over slowing port arrivals in Ivory Coast and the structural supply deficit backdrop. The recent volatility reflects competing fundamental narratives: tightening supplies in producing regions against weakening demand signals from consuming nations and policy-induced supply relief from the EUDR delay.

Outlook Considerations

Rabobank’s latest revision to the 2025/26 global cocoa surplus—cut to 250,000 MT from 328,000 MT—maintains the view that structural imbalance persists despite recent forecast adjustments. With cocoa cultivation dynamics in Ghana and the broader West African region showing mixed signals, and with global demand remaining subdued across major processing centers, cocoa prices are likely to remain range-bound, subject to periodic liquidation and short-covering activity dependent on macroeconomic conditions and dollar momentum.