Global cocoa prices fell for a second consecutive session on Friday, extending a selloff driven by weakening demand signals across major consumption regions and rising indications of ample global supply, reinforcing concerns that the market may be entering a sustained correction phase after recent highs.
May ICE New York cocoa closed down 5.38 per cent, while May ICE London cocoa declined 4.17 per cent, marking one of the heaviest back-to-back losses in recent trading sessions as sentiment deteriorated across the soft commodities complex.
The selloff comes amid a convergence of bearish fundamentals, including weaker-than-expected chocolate consumption, rising inventory levels, and steady output from key producing regions in West Africa and Latin America.
Fresh industry data points to a broad-based slowdown in cocoa processing and chocolate consumption across key markets.
In North America, the National Confectioners Association reported that first-quarter cocoa grindings fell 3.8% year-on-year to 106,087 metric tonnes, reflecting softer demand from chocolate manufacturers.
In Europe, the decline was even more pronounced. The European Cocoa Association reported a 7.8 per cent year-on-year drop in Q1 grindings to 325,895 metric tonnes, worse than market expectations of a 6 per cent decline and the lowest first-quarter level in 17 years.
Asia, however, provided a partial counterweight, with the Cocoa Association of Asia reporting a 5.2 per cent year-on-year increase in Q1 grindings to 223,503 metric tonnes, significantly outperforming expectations of a 6.7 per cent decline.
Despite Asia’s resilience, the overall global picture points to weakening consumption momentum in mature markets, particularly in North America and Europe, where chocolate demand has historically been strongest.
On the supply side, market fundamentals continue to exert downward pressure on prices, with inventory levels rising and production trends showing mixed but generally stable output across major producers.
ICE cocoa stocks climbed to a 19.75-month high of 2,624,492 bags recently, signalling ample availability in certified warehouse systems.
In West Africa, the world’s dominant production region, export flows remain steady. Ivory Coast data showed cocoa shipments reached 1.46 million metric tonnes between October 1 and April 12, up 0.7 per cent year-on-year.
Nigeria, the world’s fifth-largest cocoa producer, also reported higher export activity, with December shipments rising 17 per cent year-on-year to 54,799 metric tonnes.
However, Nigeria’s Cocoa Association projects domestic production could fall 11 per cent in the 2025/26 season to 305,000 metric tonnes, indicating uneven regional output trends.
Despite recent rainfall, drought conditions continue to weigh on long-term production prospects in key growing regions.
Compounding weather risks are significant policy-driven income shocks for farmers. Ghana recently cut its official cocoa purchase price by nearly 30 per cent for the 2025/26 season, while Ivory Coast reduced farmer payments by 57% for the mid-crop harvest cycle.
Ivory Coast has projected a 10.8 per cent year-on-year decline in 2025/26 production to 1.65 million metric tonnes, down from 1.85 million metric tonnes in the prior season. However, global balance sheet estimates remain largely bearish.
The International Cocoa Organization (ICCO) recently raised its estimate for the 2024/25 global surplus to 75,000 metric tonnes, marking the first surplus in four years. Global production is estimated to have increased 8.4 per cent year-on-year to 4.7 million metric tonnes.
Forward-looking projections remain similarly loose. StoneX forecasts global surpluses of 287,000 metric tonnes for 2025/26 and 267,000 metric tonnes for 2026/27.
Rabobank, however, trimmed its 2025/26 surplus forecast to 250,000 metric tonnes from a prior estimate of 328,000 metric tonnes, reflecting some expectation of tightening.
On the logistics front, the reopening of the Strait of Hormuz has also contributed to downward price pressure, easing concerns about shipping disruptions and improving global supply chain fluidity.
Improved maritime stability is expected to support more efficient cocoa movement from West Africa and Latin America to key processing hubs in Europe and North America.
The cocoa market is currently being shaped by an alignment of bearish forces. Weakening consumption in major markets, elevated inventories, steady West African exports, and expectations of continued global surpluses.
While Asia continues to show relative strength in processing demand, it has not been sufficient to offset declines elsewhere.
At the same time, structural risks remain in play, including West African drought conditions, farmer pricing reductions, and rising geopolitical uncertainties in global logistics corridors.
