Cocoa Prices Increase as Hershey Eases Worries Over Cocoa Demand

Cocoa Futures Surge Following Positive Industry Outlook

March contracts for ICE NY cocoa (CCH26) have advanced by 2.67% (+109), while March ICE London cocoa #7 (CAH26) has gained 3.09% (+92) today.

The upward momentum in cocoa prices comes after Hershey projected a stronger-than-anticipated forecast for 2026, which has eased worries about demand and prompted traders to cover short positions in cocoa futures.

Recent Trends in Cocoa Markets

Last Friday, New York cocoa futures touched their lowest point in over two years, while London cocoa also hit a multi-year low. This decline was driven by robust global supplies and subdued demand. StoneX recently projected a worldwide cocoa surplus of 287,000 metric tons for the 2025/26 season and 267,000 metric tons for 2026/27. Additionally, the International Cocoa Organization (ICCO) reported on January 23 that global cocoa inventories increased by 4.2% year-over-year, reaching 1.1 million metric tons.

Concerns about demand have weighed heavily on cocoa prices, as consumers are hesitant to purchase chocolate at elevated prices. Barry Callebaut AG, the leading bulk chocolate producer, announced a 22% drop in cocoa division sales volume for the quarter ending November 30, attributing the decline to weak market demand and a strategic focus on higher-margin segments.

Grinding data further highlights the soft demand. The European Cocoa Association reported that fourth-quarter European cocoa grindings fell by 8.3% year-over-year to 304,470 metric tons, a steeper drop than the expected 2.9% and the lowest Q4 figure in 12 years. In Asia, Q4 cocoa grindings declined by 4.8% year-over-year to 197,022 metric tons, according to the Cocoa Association of Asia. Meanwhile, North American grindings edged up just 0.3% to 103,117 metric tons, as per the National Confectioners Association.

After reaching a 10.5-month low of 1,626,105 bags on December 26, ICE-monitored cocoa inventories in U.S. ports have rebounded, which has put additional pressure on prices. As of Wednesday, inventories had risen to a 2.75-month high of 1,793,547 bags.

Supply Developments in Major Producing Regions

Reduced cocoa deliveries to Ivory Coast ports are providing some price support. Cumulative figures for the current marketing year (October 1, 2025, to February 1, 2026) show that Ivorian farmers shipped 1.23 million metric tons of cocoa, a 4.7% decrease from the same period last year. The Ivory Coast remains the world’s top cocoa producer.

Favorable weather in West Africa, however, is expected to boost cocoa output, which could weigh on prices. Tropical General Investments Group recently noted that improved growing conditions are likely to enhance the February-March cocoa harvest in both the Ivory Coast and Ghana, with farmers reporting larger and healthier pods compared to last year.

Mondelez has also indicated that the latest cocoa pod count in West Africa is 7% above the five-year average and significantly higher than last year’s crop. The main harvest in the Ivory Coast is underway, and growers are optimistic about the quality.

Meanwhile, Nigeria, the world’s fifth-largest cocoa producer, is experiencing a reduction in supply, which is supportive for prices. November cocoa exports from Nigeria fell by 7% year-over-year to 35,203 metric tons. The Cocoa Association of Nigeria expects the country’s 2025/26 cocoa output to drop by 11% to 305,000 metric tons, down from a projected 344,000 metric tons for 2024/25.

Global Supply and Demand Outlook

The outlook for cocoa prices is also influenced by tightening global supplies. On November 28, the ICCO reduced its estimate for the 2024/25 global cocoa surplus to 49,000 metric tons, down from a previous forecast of 142,000 metric tons, and lowered its production estimate to 4.69 million metric tons from 4.84 million. Rabobank also revised its 2025/26 global cocoa surplus projection downward to 250,000 metric tons from 328,000 metric tons previously.

On May 30, the ICCO reported a revised global cocoa deficit of 494,000 metric tons for the 2023/24 season—the largest shortfall in over six decades. The organization noted that cocoa production for 2023/24 dropped by 12.9% year-over-year to 4.368 million metric tons. For 2024/25, the ICCO anticipates a global surplus of 49,000 metric tons, marking the first surplus in four years, with production rising 7.4% to 4.69 million metric tons.