Nigeria Cocoa Price Slide Mirrors Global Demand Collapse and Inventory Glut

The cocoa market is facing unprecedented downward pressure as multiple forces converge: Nigeria’s production crisis, collapsing demand worldwide, and mounting inventory levels are creating a perfect storm for price decline. With Nigeria’s cocoa price trajectory tightly linked to global market dynamics, recent developments paint a grim picture for producers and bullish signals for manufacturers struggling with elevated chocolate costs.

Rapid Price Retreat Across Global Cocoa Markets

March contracts for ICE NY cocoa (CCH26) have retreated 6.18%, shedding 276 points, while March contracts for ICE London cocoa (CAH26) slumped 6.57%, losing 211 points. This downward momentum has persisted for three consecutive weeks, with New York cocoa touching its lowest level in two years and London cocoa marking a 2.25-year low. The relentless selling pressure reflects widespread pessimism about both current conditions and near-term prospects for cocoa price recovery.

Demand Crisis Deepens: Global Chocolate Consumption Tumbles

Chocolate manufacturers worldwide are pulling back on cocoa purchases as elevated input costs force consumers away from chocolate products. Barry Callebaut AG, the world’s premier supplier of bulk chocolate, disclosed a stunning 22% year-over-year collapse in cocoa division sales during the quarter ended November 30, citing weak market demand and a strategic shift toward higher-margin cocoa applications.

The demand erosion extends across all major consuming regions. Europe saw cocoa grinding volumes plummet 8.3% year-over-year to 304,470 metric tons in Q4, a steeper decline than anticipated and the weakest fourth-quarter performance in 12 years. Asia experienced a 4.8% contraction to 197,022 metric tons, while North America ground just 103,117 metric tons, up a meager 0.3%. These figures underscore how consumer price resistance is rippling through the entire chocolate manufacturing chain.

Inventory Glut Pressures Cocoa Prices Globally

The International Cocoa Organization (ICCO) reported that worldwide cocoa inventories swelled by 4.2% year-over-year for the 2024/25 season, reaching 1.1 million metric tons. This abundance of stock is exerting relentless downward pressure on cocoa price levels. ICE-monitored cocoa bags stored at U.S. ports illustrate the inventory dynamic: after hitting a 10.25-month low of 1,626,105 bags on December 26, stocks rebounded to a two-month peak of 1,752,451 bags by Thursday—a bearish signal for price recovery.

Nigeria Cocoa Production Faces Steeper Decline

Nigeria, the world’s fifth-largest cocoa producer, is experiencing a troubling production contraction that threatens global supply chains. November cocoa exports from Nigeria skidded 7% year-over-year to 35,203 metric tons. More alarmingly, the Nigerian Cocoa Association forecasts that 2025/26 production will sink 11% to 305,000 metric tons, down from the previously projected 344,000 metric tons for 2024/25.

The Nigeria cocoa price situation reflects not only current weakness but also mounting structural concerns. Ivory Coast, the world’s leading producer, shipped 1.16 million metric tons to ports from October 1 to January 18, representing a 3.3% decline compared to the previous year’s equivalent period. Combined with Nigeria’s output crunch, these trends signal tightening global cocoa supply that may ultimately support cocoa price levels.

Supply Tightening Signals Potential Price Support

Despite the bearish demand backdrop, emerging supply constraints are beginning to lend structural support to cocoa markets. On November 28, the ICCO downwardly revised its 2024/25 global cocoa surplus projection to just 49,000 metric tons, down sharply from its prior estimate of 142,000 metric tons. The organization also trimmed its production forecast to 4.69 million metric tons from the earlier projection of 4.84 million metric tons.

Rabobank similarly recalibrated its 2025/26 surplus outlook to 250,000 metric tons from 328,000 metric tons. These downward revisions underscore growing recognition that the global cocoa supply picture is tightening more rapidly than previously anticipated, potentially limiting further downside for cocoa price in the medium term.

Harvest Conditions and Policy Backdrop Shape Market Dynamics

Favorable weather across West Africa is supporting robust pod development heading into the February-March harvest window in both Ivory Coast and Ghana. Farmers are reporting more abundant and healthier pods compared to last year, and Mondelez noted that the latest West African pod count runs 7% above the five-year average. Ivory Coast’s main harvest is underway with local optimism about quality prospects.

On the policy front, the European Parliament approved a one-year postponement of the EU’s deforestation regulation (EUDR) on November 26, allowing continued imports from regions with ongoing deforestation. This reprieve keeps cocoa supplies ample in the near term, though the delay itself underscores regulatory tensions around sustainable sourcing that could reshape cocoa supply dynamics once the postponement expires.

Outlook: Cocoa Price Trapped Between Competing Forces

The cocoa price outlook hangs between competing pressures: demand remains in the doldrums as chocolate price points push consumers away, while inventories remain at elevated levels that discourage fresh purchases. Yet emerging supply tightness—especially Nigeria’s production contraction and the decline from Ivory Coast—hints that cocoa price support could materialize if demand stabilizes or inventories continue to normalize. For now, cocoa price remains vulnerable to downside, but the structural backdrop of tightening supply suggests that any demand recovery could reignite buying interest in Nigeria and other origin cocoa markets.