Cocoa prices are caught between collapsing consumer demand and swelling global stockpiles, as traders weigh a rare convergence of bearish forces that is reshaping the market heading into the second quarter of 2026.
New York cocoa futures slipped on Monday, with May Intercontinental Exchange (ICE) New York cocoa contracts down 0.46 percent, as data from Bloomberg Intelligence pointed to chocolate candy sales this Easter tracking roughly five percent below last year’s figures, a notable miss during one of the calendar’s most important seasonal windows for chocolate consumption.
The demand signal is compounding an already-heavy supply picture. ICE cocoa warehouse inventories climbed to 2,375,262 bags last week, a one-and-a-half-year high, as beans continued to flow into certified storage with little buyer urgency to absorb them.
Weather conditions in West Africa offer no near-term relief on supply concerns, though not for the usual reasons. Recent rainfall across the Ivory Coast and Ghana has fallen short of what drought-stressed farms require. Data from the African Flood and Drought Monitor, as of March 29, showed drought blanketing more than half of the Ivory Coast and approximately two-thirds of Ghana, conditions that briefly sent New York cocoa to a two-and-a-half-week high last Wednesday before broader sentiment reasserted itself.
Positioned funds appear acutely bearish. The weekly Commitment of Traders (COT) report released last Friday showed money managers added 3,481 contracts to their net short position in London cocoa in the week ended March 31, lifting the aggregate short to 33,827 contracts, the most bearish fund posture recorded in over eight years. Analysts note that an extreme short position of this scale raises the risk of a short-covering rally if any supply shock materialises.
A geopolitical variable is working quietly in the opposite direction. The disruption to shipping through the Strait of Hormuz, a critical chokepoint for global trade, has tightened fertiliser supplies reaching cocoa-growing regions, while simultaneously pushing up shipping rates, insurance premiums, and fuel costs. Those cost increases are landing directly on cocoa importers, adding a layer of support beneath prices even as the demand picture weakens.
Production-side data offers a mixed read. The Ivory Coast, the world’s largest cocoa producer, has shipped 1.43 million metric tonnes (MMT) of cocoa to ports so far in the current marketing year running from October 2025 through late March, just 0.7 percent below the 1.44 million metric tonnes recorded in the same period a year ago.
Barry Callebaut (AG), the world’s largest bulk chocolate manufacturer, reported a 22 percent drop in cocoa division sales volume for the quarter ending November 30, attributing the decline to soft market demand. European cocoa grindings fell 8.3 percent year-on-year to 304,470 metric tonnes in the fourth quarter of last year, the weakest fourth-quarter reading in 12 years, while Asian grindings slipped 4.8 percent over the same period to 197,022 metric tonnes. North American grindings showed marginal growth of 0.3 percent.
On the supply balance, the International Cocoa Organization (ICCO) in March revised its estimate for the 2024/25 global cocoa surplus upward to 75,000 metric tonnes from 49,000 metric tonnes, marking the first surplus in four years. Global cocoa production in 2024/25 is estimated to have risen 8.4 percent year-on-year to 4.7 million metric tonnes. Looking further ahead, commodity research firm StoneX projected surpluses of 287,000 metric tonnes in 2025/26 and 267,000 metric tonnes in 2026/27.
Rabobank, meanwhile, has trimmed its 2025/26 surplus estimate to 250,000 metric tonnes from 328,000 metric tonnes projected in November, reflecting some upward revision to demand assumptions and the lingering effect of drought on West African yields.
