Cocoa futures moved higher on Wednesday as mounting supply disruptions linked to the closure of the Strait of Hormuz outweighed persistent signs of weakening global chocolate demand, keeping traders focused on competing pressures across the market.
July ICE New York cocoa was up 2.55 percent and May ICE London cocoa rose 2.09 percent, with the prolonged closure of the Strait of Hormuz cited as the primary driver of the day’s gains. The closure is disrupting fertilizer supply chains and pushing up global shipping rates, insurance premiums, and fuel costs, raising production and import expenses across the cocoa trade.
The price support from logistics disruptions comes against a backdrop of broadly bearish demand fundamentals. Circana data from April 14 showed that chocolate candy sales in North America in the 13 weeks ending March 22 fell 1.3 percent from the same period a year earlier. Bloomberg Intelligence separately reported that chocolate sales over the Easter holiday, typically one of the strongest periods for consumption, declined approximately 5 percent compared with last year.
Grinding data has reinforced the demand concern. The National Confectioners Association reported that North American first quarter cocoa grindings fell 3.8 percent year on year to 106,087 metric tonnes (MT). The European Cocoa Association said European first quarter grindings dropped 7.8 percent year on year to 325,895 MT, below expectations of a 6 percent decline and the lowest first quarter figure in 17 years.
ICE cocoa inventories rose to a 20-month high of 2,632,357 bags, adding to the bearish supply picture on the demand side. Ivory Coast shipment data through April 19 showed farmers delivered 1.51 million metric tonnes to ports in the current marketing year, up 0.7 percent from the same period a year ago, indicating stable near-term West African supply.
Against the bearish demand signals, supply risks from producing countries are providing a counterweight. The Ivory Coast has projected its 2025/26 cocoa production will fall 10.8 percent year on year to 1.65 million metric tonnes. Nigerian cocoa exports in February fell 4.6 percent year on year to 40,110 MT, and Nigeria’s Cocoa Association projects national output in 2025/26 will decline 11 percent to 305,000 MT.
Drought conditions in West Africa are adding to medium-term supply uncertainty. The African Flood and Drought Monitor reported as of March 29 that drought conditions covered more than half of Ivory Coast and approximately two-thirds of Ghana, with recent rainfall insufficient to ease concerns in either country. Ghana reduced its official farmgate cocoa price by nearly 30 percent for the current season, while Ivory Coast announced a 57 percent cut in farmer pay for the mid-crop harvest that began this month.
The broader market balance remains a subject of debate among forecasters. The International Cocoa Organization (ICCO) in March raised its global 2024/25 cocoa surplus estimate to 75,000 MT, the first surplus in four years, and estimated global production in 2024/25 rose 8.4 percent year on year to 4.7 million metric tonnes. Rabobank cut its 2025/26 global surplus estimate to 250,000 MT from 328,000 MT in November, while StoneX in January forecast surpluses of 287,000 MT in 2025/26 and 267,000 MT in 2026/27.
One bright spot in demand came from Asia. The Cocoa Association of Asia reported first quarter grindings rose 5.2 percent year on year to 223,503 MT, well ahead of expectations for a 6.7 percent decline.
