Cocoa prices settled lower on Friday, weighed down by persistent concerns over tepid global demand for chocolate and its key ingredient. July ICE NY cocoa futures (CCN26) closed down 27 points, or 0.78%, at $3435.00 per ton, while May ICE London cocoa #7 (CAK26) fell 13 points, or 0.51%, to $2535.00 per ton.
Weakening Consumer Appetite Hits Chocolate Sales
The downward pressure on cocoa prices is directly linked to recent data revealing a slowdown in chocolate consumption. Circana reported last Tuesday that chocolate candy sales in North America for the 13 weeks ending March 22 declined by 1.3% compared to the same period last year. Further compounding these concerns, Bloomberg Intelligence indicated that chocolate candy sales during the recent Easter holiday, a typically robust season for chocolate purchases, dropped by approximately 5% year-over-year.
Grinding Activity Declines in Major Markets
The subdued demand is reflected in a decrease in cocoa processing, or grinding, activity across major consuming regions. In North America, Q1 cocoa grindings fell by 3.8% year-over-year to 106,087 metric tons, according to the National Confectioners Association’s report last Thursday. Europe experienced a more significant contraction, with Q1 European cocoa grindings declining by 7.8% year-over-year to 325,895 metric tons. This figure was notably worse than the anticipated 6% year-over-year decrease and represents the lowest Q1 volume in 17 years.
Conversely, the Asian market presented a more optimistic picture. The Cocoa Association of Asia reported an unexpected increase in Q1 Asian cocoa grindings, which rose by 5.2% year-over-year to 223,503 metric tons. This performance surpassed expectations of a 6.7% decline.
Ample Supplies and Inventory Build-Up
Adding to the bearish sentiment, current cocoa supplies remain abundant. ICE cocoa inventories reached a 20-month high of 2,632,357 bags on Monday, indicating a surplus in available stock. Cocoa supplies from the Ivory Coast, the world’s largest producer, are also ample. Cumulative data from the Ivory Coast showed that farmers shipped 1.48 million metric tons of cocoa to ports in the current marketing year (October 1, 2025, through April 19, 2026), which is unchanged from the same period last year.
Geopolitical and Fund Activity Offer Counterbalance
Despite the prevailing bearish factors, certain elements are providing some support to cocoa prices. Concerns over a prolonged US-Iran conflict and its potential to disrupt global trade routes, including the Strait of Hormuz, could impact cocoa supplies. Such a disruption could lead to increased fertilizer costs, higher shipping rates, insurance premiums, and fuel prices, ultimately raising import costs for cocoa buyers.
Furthermore, an excessively short position held by funds in New York cocoa could fuel a short-covering rally. The weekly Commitment of Traders (COT) report from last Friday revealed that funds increased their short positions in NY cocoa by 1,737 net short positions in the week ended April 14, reaching 18,105 net short positions, the most in over three years.
Production Outlook and Weather Concerns
Smaller cocoa supplies from Nigeria, the world’s fifth-largest producer, are also a supportive factor. Nigerian cocoa exports in February fell by 4.6% year-over-year to 40,110 metric tons, according to Bloomberg. The Nigerian Cocoa Association projects a 11% year-over-year decrease in Nigerian cocoa production for the 2025/26 season, estimating it at 305,000 metric tons, down from a projected 344,000 metric tons for the 2024/25 crop year.
Recent rainfall in West Africa has been insufficient to alleviate drought concerns in the Ivory Coast and Ghana, which together produce over half of the world’s cocoa. As of March 29, drought conditions affected more than half of the Ivory Coast and about two-thirds of Ghana, according to the African Flood and Drought Monitor.
In response to challenging conditions, Ghana cut the official price it pays its cocoa farmers by nearly 30% for the 2025/26 growing season. The Ivory Coast also announced a 57% cut in cocoa farmer pay, effective for the mid-crop harvest that began this month.
On the production front, the Ivory Coast has forecast its cocoa production for 2025/26 to fall by 10.8% year-over-year to 1.65 million metric tons, down from 1.85 million metric tons in 2024/25. Rabobank adjusted its 2025/26 global cocoa surplus estimate downward to 250,000 metric tons in February, from a previous forecast of 328,000 metric tons.
However, the International Cocoa Organization (ICCO) revised its global 2024/25 cocoa surplus estimate upward to 75,000 metric tons in March, from 49,000 metric tons in November. This marked the first surplus in four years, with the ICCO estimating global cocoa production in 2024/25 to have climbed by 8.4% year-over-year to 4.7 million metric tons. Looking ahead, StoneX forecasts a global cocoa surplus of 287,000 metric tons for the 2025/26 season and 267,000 metric tons for 2026/27.
The interplay of weakening consumer demand, ample supplies, and potential supply disruptions continues to shape the cocoa market, creating a complex outlook for prices.
