Cocoa Prices Retreat as West African Crop Prospects Improve

Cocoa prices fell to one-month lows on Wednesday as improving crop conditions across West Africa eased supply concerns. Favorable weather in key producing regions has strengthened expectations for a larger mid-season harvest, placing downward pressure on prices.

Market sentiment weakened after Tropical General Investments Group said growing conditions in Ivory Coast and Ghana remain supportive ahead of the February–March harvest window. Farmers in both countries report healthier trees and larger cocoa pods compared with the same period last year, signaling stronger yields.

Strong Crop Outlook Weighs on Cocoa Prices

Additional pressure came from chocolate maker Mondelez, which noted that the latest cocoa pod count in West Africa is about 7% above the five-year average and well above last season’s levels. The main crop harvest in Ivory Coast is now underway, and early indications point to solid quality.

Despite the decline, cocoa prices continue to receive some support from slower shipments out of Ivory Coast. Cumulative export data show that farmers delivered 1.073 million metric tons of cocoa between October 1 and January 4, representing a 3.3% year-on-year decline. As the world’s largest producer, reduced exports from Ivory Coast remain a key market driver.

Inventory Declines and Index Demand Offer Support

Underlying support for cocoa prices also comes from expectations of index-related buying. Cocoa futures were added to the Bloomberg Commodity Index this month, a move that Citigroup estimates could attract up to $2 billion in new buying interest.

Meanwhile, ICE-monitored cocoa inventories in U.S. ports fell to a 9.75-month low of 1.63 million bags in late December, highlighting tighter near-term supplies.

Demand Weakness Caps Upside Potential

However, softer global demand continues to limit any rebound in cocoa prices. Recent data showed a sharp drop in cocoa grindings across Asia and Europe during the third quarter, signaling weaker consumption. Although North American grindings rose slightly, analysts caution that changes in reporting may have distorted the figures.

Lower production expectations in Nigeria, the world’s fifth-largest producer, provide limited support. Nigeria’s Cocoa Association forecasts an 11% year-on-year decline in output for the 2025/26 season, adding longer-term uncertainty to the global supply outlook.

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