Cocoa Prices Gain as Surging Shipping Costs May Curb Exports

May ICE NY cocoa (CCK26) on Monday closed up +133 (+4.61%), and May ICE London cocoa #7 (CAK26) closed up +60 (+2.92%).

Cocoa prices recovered from early losses on Monday and rallied sharply amid concerns that higher shipping costs will curb cocoa exports and limit supplies.  The war in Iran has halted most shipping traffic through the Strait of Hormuz, boosting global shipping rates, insurance, and fuel costs, thereby raising cocoa importers' costs.

Slowing cocoa deliveries to ports in the Ivory Coast is also supportive of prices.  Monday's cumulative data from the Ivory Coast shows that Ivory Coast farmers shipped 1.34 MMT of cocoa to ports in the current marketing year (October 1, 2025, through March 1, 2026), down -3.6% from 1.39 MMT in the same period a year ago.  

Cocoa prices initially moved lower today, with May NY cocoa posting a contract low and nearest-futures London cocoa (H26) falling to a 3-year low after the International Cocoa Organization (ICCO) raised its global 2024/25 cocoa surplus estimate to 75,000 MT from a November forecast of +49,000 MT, the first surplus in four years.  The ICCO also forecasts global cocoa production in 2024/25 will climb by +8.4% y/y to 4.7 MMT.

Cocoa prices are in the midst of a seven-week-long downtrend, with NY cocoa falling to a 2.75-year low last Friday amid robust global supplies and slack demand.  On January 29, StoneX forecasted a global cocoa surplus of 287,000 MT in the 2025/26 season and a 267,000 MT surplus for 2026/27.  Also, the International Cocoa Organization (ICCO) reported on January 23 that global cocoa stocks rose +4.2% y/y to 1.1 MMT.

International cocoa buyers are reluctant to pay official farm-gate prices in the Ivory Coast and Ghana, which are well above current world prices.  The lack of buyers is boosting supplies as ICE cocoa inventories rose to a 6-month high of 2,174,770 bags last Friday.

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 said it was considering a 35% cut in prices that would kick in for the mid-crop harvest that starts in April.  The Ivory Coast and Ghana produce more than half of the world's cocoa.  

Favorable growing conditions in West Africa are also a negative factor for cocoa prices.  Tropical General Investments Group recently said that favorable growing conditions in West Africa are expected to boost the February-March mid-crop cocoa harvest in the Ivory Coast and Ghana, as farmers report larger and healthier pods compared with the same period last year.  The Ivory Coast mid-crop accounts for about 25% of annual production and is estimated at 400,000 to 450,000 MT this year.  

Demand concerns have hammered cocoa prices as consumers continue to balk at the high price of chocolate.  On January 28, Barry Callebaut AG, the world's largest bulk chocolate maker, reported a -22% decline in sales volume in its cocoa division for the quarter ending November 30, citing "negative market demand and a prioritization of volume toward higher-return segments within cocoa."

Grinding reports also showed weak demand.  On January 15, the European Cocoa Association reported that Q4 European cocoa grindings fell -8.3% y/y to 304,470 MT, a bigger decline than expectations of -2.9% y/y and the lowest for a Q4 in 12 years.  On December 16, the Cocoa Association of Asia reported that Q4 Asian cocoa grindings fell -4.8% y/y to 197,022 MT.  Also, the National Confectioners Association reported Q4 North American cocoa grindings rose only +0.3% y/y to 103,117 MT.

Chocolate maker Mondelez recently said that the latest cocoa pod count in West Africa is 7% above the five-year average and "materially higher" than last year's crop.  Harvest of the Ivory Coast's main crop has begun, and farmers are optimistic about its quality.

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