Weakness in Global Cocoa Demand Pressures Prices

May ICE NY cocoa (CCK26) on Friday closed down -181 (-5.38%), and May ICE London cocoa #7 (CAK26) closed down -104 (-4.17%).

Cocoa prices settled sharply lower on Friday for a second day on signs of weak global demand.  The National Confectioners Association reported that North American Q1 cocoa grindings fell -3.8% y/y to 106,087 MT.  The European Cocoa Association reported Thursday that Q1 European cocoa grindings fell -7.8% y/y to 325,895 MT, a bigger decline than expectations of -6% y/y and the lowest for a Q1 in 17 years.  Conversely, the Cocoa Association of Asia reported that Q1 Asian cocoa grindings unexpectedly rose +5.2% y/y to 223,503 MT, stronger than expectations of a decline of -6.7% y/y.

The reopening of the Strait of Hormuz on Friday is also negative for cocoa prices, as a return to normal shipping flows should ease global cocoa supply concerns.

Weak signs of chocolate demand are bearish for cocoa prices.  Circana reported Tuesday that chocolate candy sales in North America in the 13 weeks ending March 22 fell -1.3% from the same period a year ago.  Also, Bloomberg Intelligence said that chocolate candy sales during this past Easter holiday, a prime seasonal time for chocolate consumption, fell about 5% from last year.

Ample supplies are also bearish for cocoa prices, as ICE cocoa inventories rose to a 19.75-month high of 2,624,492 bags on Thursday.

Larger cocoa supplies from the Ivory Coast are bearish for prices.  Monday's cumulative data from the Ivory Coast showed that farmers shipped 1.46 MMT of cocoa to ports in the current marketing year (October 1, 2025, through April 12, 2026), up +0.7% from 1.45 MMT in the same period a year ago.  

An excessively short position by funds in New York cocoa could add fuel to any short-covering rally.  Last Friday's weekly Commitment of Traders (COT) report showed funds boosted their short position in NY cocoa by 1,900 net short positions in the week ended April 7 to 16,368, the most in more than 3 years.

Recent rainfall in West Africa has been insufficient to ease drought concerns in the Ivory Coast and Ghana.  According to the African Flood and Drought Monitor, as of March 29, drought conditions blanket more than half of the Ivory Coast and about two-thirds of Ghana.

Last month, Ghana cut the official price it pays its cocoa farmers by nearly 30% for supplies for the 2025/26 growing season, and the Ivory Coast also said it would cut cocoa farmer pay by 57% that would kick in for the mid-crop harvest that started this month.  The Ivory Coast and Ghana produce more than half of the world's cocoa.

Also undercutting cocoa prices are higher exports from Nigeria, the world's fifth-largest cocoa producer.  On February 17, Bloomberg reported that Nigerian Dec cocoa exports rose +17% y/y to 54,799 MT.  Nigeria's Cocoa Association projects that Nigerian cocoa production in 2025/26 will fall by -11% y/y to 305,000 MT, from a projected 344,000 MT for the 2024/25 crop year.  

On the bullish side, the Ivory Coast said its cocoa production in 2025/26 would fall -10.8% y/y to 1.65 MMT from 1.85 MMT in 2024/25.  On February 10, Rabobank cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.

As a bearish factor, the International Cocoa Organization (ICCO) on March 2 raised its global 2024/25 cocoa surplus estimate to 75,000 MT from 49,000 MT in November, which was the first surplus in four years.  ICCO estimated that global cocoa production in 2024/25 climbed by +8.4% y/y to 4.7 MMT.  Looking ahead, StoneX on January 29 forecasted a global cocoa surplus of 287,000 MT in the 2025/26 season and a 267,000 MT surplus for 2026/27.