West African Cocoa Market Shows Signs of Recovery as Producers Control Supply Dynamics

The cocoa market in West Africa has demonstrated resilience in recent weeks, with prices moving higher as regional producers strategically manage their supply flows into global markets. March futures contracts on ICE NY cocoa rose by 147 basis points (3.50%), while London cocoa futures climbed 73 points (2.43%), signaling a potential inflection point after prices had recently sunk to their lowest levels in two years.

This recovery reflects a significant shift in African market dynamics. West African producers—whose region supplies the vast majority of global cocoa—have begun restricting shipments in response to historically low prices that threaten farm profitability. Recent export data from Ivory Coast, the world’s leading cocoa producer, underscores this supply restriction strategy. Through late January in the current marketing year (October 2025 through January 2026), Ivory Coast farmers transported 1.20 million metric tons to ports, representing a 3.2% decline compared to 1.24 million metric tons during the equivalent period a year earlier. This deliberate pullback demonstrates how African market participants are leveraging supply control to support pricing.

Price Recovery Driven by African Market Dynamics

Beyond supply management, currency movements have further bolstered the cocoa market recovery. Dollar weakness typically benefits commodity prices denominated in the U.S. currency, providing an additional tailwind to cocoa valuations. The combination of restricted shipments from West Africa and softer U.S. currency dynamics has created room for prices to rebound from their recent lows.

However, this recovery faces headwinds from elevated global stockpiles. The International Cocoa Organization reported that worldwide cocoa stocks rose 4.2% year-over-year to reach 1.1 million metric tons, representing abundant inventory that continues to pressure prices. This supply-demand imbalance reflects a broader shift in the market landscape: while African producers hold back supplies, global demand has deteriorated significantly.

Global Chocolate Demand Faces Sustained Pressure

The weakness in chocolate consumption stands as perhaps the most consequential headwind for the cocoa market. Barry Callebaut, the world’s largest bulk chocolate manufacturer, reported a troubling 22% contraction in sales volume within its cocoa division during the quarter ending November 30. The company cited “negative market demand and a prioritization of volume toward higher-return segments,” signaling that even the industry’s dominant player faces consumer resistance to elevated chocolate prices.

Grinding reports—a key indicator of industrial cocoa processing demand—have painted an even bleaker picture. The European Cocoa Association disclosed that Q4 European cocoa grindings plummeted 8.3% year-over-year to 304,470 metric tons, substantially exceeding the expected decline of 2.9% and marking the worst performance in a dozen years for the fourth quarter. Asian demand showed similar weakness, with the Cocoa Association of Asia reporting a 4.8% year-over-year decrease to 197,022 metric tons in the same quarter. North America provided marginal relief, with the National Confectioners Association noting Q4 grindings rose only 0.3% year-over-year to 103,117 metric tons—a virtually flat result that underscores tepid demand across all major consuming regions.

West African Production Outlook Supports Price Recovery

Partially offsetting demand concerns, favorable growing conditions across West Africa suggest a potentially robust harvest ahead. Tropical General Investments Group recently highlighted that beneficial weather patterns in Ivory Coast and Ghana are expected to generate larger and healthier cocoa pods during the February-March harvest season compared to year-ago levels. Chocolate producer Mondelez provided supporting data, noting that the current pod count in West Africa stands 7% above the five-year average and materially exceeds last year’s crop cycle.

With the Ivory Coast’s main crop harvest now underway, farmer sentiment has turned optimistic regarding crop quality. Yet this production strength creates a tension within the African market: while improved supply prospects support lower cocoa prices, West African producers remain committed to restricting exports to defend pricing power. The interplay between crop abundance and strategic export management will likely define near-term price direction.

Long-Term Supply Deficit Reshapes Market Fundamentals

Despite current inventory abundance, the fundamental supply-demand architecture of the cocoa market has shifted dramatically in recent months. The International Cocoa Organization substantially revised downward its global 2024/25 surplus estimate in November, cutting it to just 49,000 metric tons from a previous projection of 142,000 metric tons—a significant reduction that signaled the organization’s concern about emerging tightness. Simultaneously, ICCO lowered its global cocoa production estimate for 2024/25 to 4.69 million metric tons from 4.84 million metric tons previously.

This deficit backdrop contrasts sharply with the previous marketing year. In May, ICCO revised its 2023/24 global cocoa deficit to a historic negative 494,000 metric tons—the largest shortage in over six decades—reflecting severe supply constraints that characterized that period. The pivot from a 494,000 metric ton deficit to a much tighter 49,000 metric ton surplus in just one year demonstrates the dramatic rebalancing underway.

Looking ahead, Rabobank—a global agricultural finance specialist—reduced its forecast for the 2025/26 global cocoa surplus to 250,000 metric tons from a November projection of 328,000 metric tons, anticipating continued supply pressure despite current production growth.

One bright spot in African market fundamentals comes from Nigeria, the world’s fifth-largest cocoa producer. Nigeria’s cocoa exports contracted 7% year-over-year to 35,203 metric tons in November, and the Nigeria Cocoa Association projects that the nation’s 2025/26 production will fall 11% to 305,000 metric tons compared to a projected 344,000 metric tons for 2024/25. These supply constraints from Nigeria provide price support, offsetting to some degree the recovery in West African output.

Market Outlook: Supply Management and Price Stabilization

The cocoa market’s trajectory will ultimately hinge on how West African producers navigate the tension between supply abundance and pricing power. As inventories have climbed to a two-month high of 1.75 million bags held in ICE-monitored U.S. ports—up sharply from a 10.25-month low of 1.63 million bags on December 26—prices have moved higher despite ample global supplies. This resilience suggests that deliberate export management from the African market, combined with demand-side weakness, is creating an equilibrium that supports prices near current recovery levels, even if the path forward remains contested between supply-side strength and demand-side fragility.