Cocoa prices fell to a two-week low on Friday as a stronger U.S. dollar and improving West African supply conditions weighed on markets.
May ICE New York cocoa closed down 76 points, or 2.28 per cent, while May ICE London cocoa fell 41 points, or 1.67 per cent, reflecting a retreat from the rally earlier in the week.
Market sentiment was pressured by reports of consistent rainfall in key West African producing regions. Farmers in the Ivory Coast and Ghana noted that improved weather conditions have supported pod development, boosting expectations for healthier mid-crop yields. This, combined with rising inventory levels, has created a supply-side headwind for cocoa prices. ICE cocoa stocks climbed to a seven-and-a-half-month high of 2,326,443 bags on Friday.
Despite the recent decline, cocoa markets had rallied just days earlier, driven by renewed buying interest in Ivory Coast cocoa export contracts.Â
Government pricing policies have been a key driver of recent market volatility. Ghana reduced the official price it pays farmers by nearly 30 per cent for the 2025/26 season, while the Ivory Coast followed suit with a 57 per cent cut for the mid-crop harvest starting in March. Combined, the two nations account for over half of global cocoa output.
Cocoa prices have also been marginally supported by geopolitical and logistical factors. The closure of the Strait of Hormuz has increased global shipping rates, insurance costs, and fuel prices, raising import costs for cocoa buyers. Additionally, slower deliveries to ports in the Ivory Coast have supported prices; cumulative shipments from October 1, 2025, through March 15, 2026, reached 1.37 million metric tons, down 2.8 per cent from the same period last year.
Demand concerns, however, remain the dominant bearish factor. Global cocoa consumption has softened amid high chocolate prices and weaker consumer demand. Barry Callebaut AG, the world’s largest bulk chocolate manufacturer, reported a 22 per cent drop in cocoa division sales volume for the quarter ending November 30, citing negative market demand and a prioritization of volume toward higher-return segments.
Grinding data reinforce the slowdown. The European Cocoa Association reported an 8.3 per cent year-on-year decline in Q4 European cocoa grindings to 304,470 metric tonnes, the lowest Q4 total in 12 years. Asia’s cocoa grindings fell 4.8 per cent to 197,022 metric tonnes, while North America saw a marginal 0.3 per cent increase to 103,117 metric tonnes.
Meanwhile, higher exports from Nigeria, the world’s fifth-largest cocoa producer, have added downward pressure. Bloomberg reported that December cocoa exports rose 17 per cent year-on-year to 54,799 metric tonnes. Nigeria’s Cocoa Association projects total production for 2025/26 will fall 11 per cent year-on-year to 305,000 metric tons, but the increase in exports underscores ongoing supply competition.
On the upside, the Ivory Coast anticipates a 10.8 per cent decline in 2025/26 cocoa production to 1.65 million metric tonnes, down from 1.85 million metric tons in 2024/25, while Rabobank has revised its global surplus estimate for the same period to 250,000 metric tonnes from an earlier forecast of 328,000 metric tons.
However, bearish signals persist. The International Cocoa Organization (ICCO) raised its global 2024/25 cocoa surplus estimate to 75,000 metric tonnes from 49,000 metric tonnes, marking the first surplus in four years. Looking ahead, StoneX forecasts a global surplus of 287,000 metric tonnes in 2025/26 and 267,000 metric tonnes in 2026/27, pointing to continued market pressure unless demand strengthens significantly.
