West African Cocoa Market Faces Mounting Supply Pressures as Harvest Season Approaches

The cocoa market is experiencing significant headwinds as global supplies continue to accumulate and demand from chocolate manufacturers remains subdued. May ICE NY cocoa futures declined by 1.07% in recent trading, while March ICE London cocoa edged lower, reflecting broader weakness across the sector. The underlying story driving these price movements tells of a market struggling to find equilibrium amid a supply-demand imbalance that is expected to persist through the upcoming West African harvest season.

Recent weeks have been challenging for cocoa price bulls. May NY cocoa posted a contract low on a recent trading day, while March London cocoa reached its lowest level in nearly three years. This decline represents part of a broader seven-week selloff that has tested the patience of market participants. The nearest-futures contract for NY cocoa posted its lowest level in 2.75 years, signaling how severely the balance between supply and demand has shifted in the market’s favor for buyers.

Global Supply Dynamics Overwhelm Demand Signals

The cocoa market faces a fundamental oversupply situation that shows no signs of easing. According to forecasts issued by major commodity analysts in late January, the global cocoa market is projected to generate a surplus of 287,000 metric tons during the 2025/26 season, with an additional 267,000 MT surplus expected in 2026/27. These projections underscore persistent structural imbalances that will likely pressure prices for months to come.

The International Cocoa Organization (ICCO) reported earlier in 2026 that worldwide cocoa stocks have risen 4.2% compared to the same period a year ago, now totaling 1.1 million metric tons. This inventory buildup reflects a market awash in supply, with farmers unable to move product at prices they consider acceptable. ICE cocoa warehouse inventories hit a 5.5-month high of 2.1 million bags recently, further illustrating the supply glut weighing on the market.

West Africa, which accounts for more than half of global cocoa production, has become a focal point for price pressure. International cocoa buyers have grown reluctant to purchase at official farm-gate prices set by major producing nations, as these official prices remain substantially elevated compared to current world market prices. This resistance to higher price points is driving farmers to hold inventory, which paradoxically increases available supplies and puts further downward pressure on global quotations.

Ghana and Ivory Coast responded to these market conditions by cutting official prices paid to cocoa farmers. Ghana reduced its cocoa price by approximately 30% for supplies destined for the 2025/26 growing season, while Ivory Coast announced consideration of a 35% price reduction set to take effect when the mid-crop harvest begins in April. These policy adjustments reflect the reality that official pricing no longer reflects actual market conditions.

Adverse Production Conditions Signal Larger West African Harvest

Agricultural conditions in West Africa have been favorable for cocoa cultivation, creating another headwind for prices seeking recovery. Tropical General Investments Group indicated that favorable growing conditions across the Ivory Coast and Ghana are expected to support the February-March mid-crop harvest, as farmers report observing larger and healthier cocoa pods compared with the same period last year.

The Ivory Coast’s mid-crop contribution typically accounts for approximately 25% of the nation’s annual production. Estimates for this year’s mid-crop range from 400,000 to 450,000 metric tons, suggesting robust supplies flowing into the market precisely when global demand remains anemic. Chocolate maker Mondelez recently noted that cocoa pod counts in West Africa are currently tracking 7% above the five-year average and materially higher than the previous year’s crop, indicating farmers are positioned to deliver substantial volume into the market.

The Ivory Coast is currently harvesting its main crop, and farming communities report optimism regarding crop quality. Another complication stems from Nigeria, the world’s fifth-largest cocoa producer, which has been ramping up exports. December cocoa exports from Nigeria rose 17% compared to the previous year, reaching 54,799 metric tons, adding further supply pressure to an already saturated global market.

Demand Erosion Amplifies Market Weakness

On the demand side, cocoa prices face equally troubling headwinds. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported that its cocoa division experienced a 22% decline in sales volume during the quarter ending in November, citing negative market demand and a shift toward higher-margin segments. This retreat signals that elevated chocolate prices resulting from the cocoa bull market have finally prompted consumer resistance.

Cocoa grinding data from major consuming regions paint a picture of weakening demand across the board. European cocoa grindings declined 8.3% year-over-year during the fourth quarter to 304,470 metric tons, exceeding expectations of a 2.9% decline and marking the weakest fourth quarter in twelve years. Asian cocoa grindings fell 4.8% year-over-year to 197,022 metric tons, while North American cocoa grindings rose only marginally at 0.3% year-over-year to 103,117 metric tons. This weak demand across all major consuming regions indicates that high cocoa prices have successfully curtailed buyer interest and chocolate production volumes.

Supply Headwinds Outweigh Limited Bright Spots

While the price outlook remains challenged, some modest supportive factors exist. The Ivory Coast has projected its 2025/26 cocoa production will decline 10.8% year-over-year to 1.65 million metric tons from 1.85 million metric tons in the prior season. Additionally, cocoa deliveries to West African ports have slowed, with today’s data showing that Ivory Coast farmers shipped 1.31 million metric tons to ports during the current marketing year through late February, down 3.7% from the same period a year ago. This deceleration in port deliveries could provide some temporary support to prices if it signals farmer caution about market conditions.

Nigeria’s Cocoa Association projects that Nigerian cocoa production in 2025/26 will fall 11% year-over-year to 305,000 metric tons from a projected 344,000 metric tons in 2024/25, suggesting that production declines in the world’s fifth-largest producer may eventually help rebalance supply.

Market Outlook: Oversupply Likely to Persist

The ICCO estimated in December that the 2024/25 global cocoa surplus would reach 49,000 metric tons, marking the first surplus year in four years after a period of deficits. Global cocoa production in 2024/25 rose 7.4% year-over-year to 4.69 million metric tons, contributing to the return of surplus conditions. More recently, Rabobank adjusted its forecast for the 2025/26 global cocoa surplus downward to 250,000 metric tons from a November estimate of 328,000 metric tons, though this figure still indicates substantial oversupply conditions ahead.

As the West African mid-crop harvest approaches in coming weeks, market participants should anticipate continued supply pressures and price volatility. The combination of higher-than-expected pod counts, farmer willingness to sell, reduced demand from chocolate manufacturers, and already-elevated global inventory levels suggests that cocoa prices will need to fall further to achieve equilibrium and encourage restocking by cocoa processors.