Cocoa Prices Sink as Weak Global Demand Raises Surplus Fears

Cocoa Prices Sink sharply as mounting evidence of weak global demand fuels concerns about growing market surpluses. Futures markets reflected this pressure on Tuesday, with New York cocoa touching a two-year low and London cocoa sliding to its weakest level in over two years. Recent grinding data from key consuming regions has further dampened optimism for a near-term recovery, keeping sentiment cautious across the cocoa market.

Weak Global Demand Pressures the Cocoa Market

One of the main drivers behind the latest decline is persistently soft demand from major cocoa-processing regions. Data from the European Cocoa Association showed that fourth-quarter European cocoa grindings dropped 8.3% year-on-year to 304,470 metric tons, far exceeding expectations and marking the weakest Q4 performance in 12 years.

Asia also reported declining demand, with the Cocoa Association of Asia noting a 4.8% year-on-year fall in Q4 grindings to 197,022 metric tons. North America offered little relief, as cocoa grindings in the region rose by just 0.3% year-on-year. Together, these figures reinforce the view that global consumption remains subdued, explaining why Cocoa Prices Sink despite past supply tightness.

Favorable West African Conditions Add Supply Pressure

Improved growing conditions in West Africa have added another layer of downward pressure. Reports from the region indicate healthier cocoa pods and stronger yields in Ivory Coast and Ghana during the February–March harvest period. Major chocolate producer Mondelez recently stated that cocoa pod counts in West Africa are 7% above the five-year average and significantly higher than last year, supporting expectations of increased output.

Although some supportive factors remain, including lower shipments from Ivory Coast and Nigeria, these have not been enough to reverse the bearish trend. Ivory Coast port arrivals for the current marketing year are down 3.3% year-on-year, while Nigeria has reported weaker exports and forecasts a notable production decline in the next season.

Supply Outlook and Policy Factors in Focus

Inventory trends and policy decisions are also shaping market expectations. While ICE-monitored cocoa stocks previously fell to multi-month lows, recent recoveries have reduced supply anxiety. Additionally, the European Union’s decision to delay its deforestation regulation has eased near-term supply constraints, allowing cocoa imports to continue largely uninterrupted.

Despite the International Cocoa Organization projecting a much smaller global surplus for 2024/25, the balance of weak demand and improving supply explains why Cocoa Prices Sink and may remain under pressure in the near term.

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