Cocoa Market Takes a Hit: What's Really Going On

Cocoa just got cheaper overnight. December contracts in New York dropped 0.62%, and London fell 1.47% after Trump announced slashing 10% reciprocal tariffs on non-US commodities like cocoa. But here's the twist—Brazilian cocoa still faces a brutal 40% national-security tariff, so the relief is mostly theoretical.

The real pressure? A cocoa harvest that's actually going well. Ivory Coast (the global #1 producer) shipped 5.7% less cocoa to ports recently, but West African crops are thriving—Mondelez just confirmed pod counts are 7% above the 5-year average. That means supply is about to flood the market.

Demand tells an even darker story. Hershey's Halloween chocolate sales were "disappointing," and Asia's Q3 cocoa grinding hit a 9-year low (down 17% YoY). European grindings also cratered—the lowest in 10 years. Translation: chocolate makers are grinding less cocoa, period.

One silver lining: ICE cocoa stockpiles just hit a 7.75-month low, and Nigeria (the world's 5th producer) is cutting output 11% next year. Plus, the ICCO predicted a 142,000 MT surplus for 2024/25—the first surplus in 4 years after a brutal 494,000 MT deficit last year.

Bottom line: Cheaper tariffs + bumper harvest + weak demand = downside pressure on cocoa prices. Time to watch those inventory levels closely.