Global cocoa markets are navigating an uncomfortable middle ground, where hard evidence of weakened processing demand is pulling prices lower, while unresolved supply chain problems in West Africa are keeping the risk of sudden upside moves very much alive.
First-quarter grind data released across major consuming regions confirmed the extent of demand erosion following the price shock of the 2024 to 2025 cocoa cycle. Europe’s first-quarter cocoa bean usage fell 7.8% year on year to 325,895 tonnes, according to the European Cocoa Association (ECA). North American grindings declined 3.8% to 106,087 tonnes, while German processing dropped 6.7% to 90,852 tonnes. Brazil slipped 0.8% to 51,715 tonnes.
The single bright spot came from Asia. Malaysia’s first-quarter grind rose 8.7% year on year to 91,496 tonnes, and the Cocoa Association of Asia reported overall regional processing up 5.2% to 223,503 tonnes, a result that surprised analysts who had expected a decline. The regional divergence matters because it suggests that lower prices are beginning to stimulate demand outside mature markets, even as Western processors continue to cut usage, reformulate products, and manage elevated bean coverage costs.
Barry Callebaut, the world’s largest bulk chocolate maker, reinforced the caution earlier this month when it slashed its full-year profit outlook, now projecting a mid-teens percentage decline in earnings before interest and tax for its 2025 to 2026 fiscal year. The reversal from guidance issued just three months earlier highlighted how quickly market conditions have shifted as cocoa prices fell from their peaks, exposing margin mismatches and overcapacity across the processing sector.
Supply remains operationally strained rather than critically short. In Ghana, favourable field conditions have supported mid-crop expectations, but payment delays of up to six months continue to limit farmers’ capacity to hire labour and bring beans to market. That financial bottleneck means improved yields do not automatically translate into available supply. In Côte d’Ivoire, below-average rainfall across several growing districts has raised concerns about bean size and quality during the critical March to August mid-crop development window, though current conditions have not reached crisis levels.
On the macroeconomic side, dollar strength is acting as a headwind for dollar-priced commodities including cocoa, while elevated freight costs and shipping disruption are raising physical supply chain expenses for processors already managing volatile bean coverage.
The net result is a market that can drift lower on weak grind data and then move sharply higher on any fresh physical disruption from West Africa. The key variables to watch over the coming weeks are West African rainfall patterns, whether Ghana’s liquidity bottleneck shows signs of resolution, and whether the volume recovery signal emerging from major manufacturers such as Nestlé translates into firmer downstream bean demand.
Until those questions resolve more clearly, cocoa markets are likely to remain range-bound and reactive, with neither a sustained bear trend nor a fresh demand-led rally yet supported by the underlying data.
