Cocoa Futures Rebound as Ivory Coast Shipments Slow, But Market Glut Weighs on Sentiment

Cocoa futures staged a modest recovery in trading on Monday, with benchmark contracts in New York and London closing in positive territory. The uptick was primarily driven by data showing a slowdown in deliveries to ports in Ivory Coast, the world's largest producer, prompting some traders to cover short positions.

The rally, however, faces significant headwinds. The market is grappling with the aftermath of a severe supply deficit and record-high prices that have drastically curbed chocolate demand. Recent data paints a picture of a market in transition: while structural supply concerns linger, immediate pressures are leaning bearish due to ample near-term supplies and sluggish consumption.

"The slight pullback in Ivorian port arrivals provided a technical excuse for a bounce, but the fundamental backdrop hasn't changed," said Marcus Thorne, a veteran soft commodities analyst at AgriVantage. "We're sitting on multi-year highs in exchange inventories. Until we see a sustained recovery in grindings—which we haven't—any price increase is likely to be sold into."

Evidence of demand destruction is stark. Barry Callebaut, the industry giant, recently reported a steep 22% drop in cocoa sales volume. Regional grinding figures from Europe and Asia for the last quarter of 2025 confirmed the trend, falling sharply year-on-year. Meanwhile, ICE-monitored cocoa stocks in U.S. ports have been climbing, reaching a 2.5-month high last week.

On the supply side, the narrative is mixed. Favorable weather in West Africa is boosting prospects for the upcoming mid-crop, with reports of healthier pod counts. Analysts at StoneX and Rabobank still project substantial global cocoa surpluses for the coming seasons. However, the International Cocoa Organization (ICCO) has progressively trimmed its surplus estimates, and production in Nigeria, another key West African producer, is expected to fall this season, providing a floor under prices.

"This is a classic case of the market trying to find equilibrium after a historic squeeze," added Thorne. "The memory of the 60-year deficit is fresh, keeping a risk premium in prices, but the current reality is one of oversupply and weak demand."

Claudia Rossi, a portfolio manager at GreenHaven Capital, offered a more measured view: "The market is digesting a complex set of signals. The long-term structural issues in West African cocoa farming haven't vanished, but the cyclical downturn in demand is real. We're likely in for a period of consolidation and volatility as these forces play out."

Not all observers were so temperate. David Kearns, an independent trader, reacted sharply to the day's price move: "It's a dead-cat bounce, pure and simple. The charts are still ugly. Consumers have finally pushed back on chocolate prices, and the industry is drowning in beans. Anyone buying this dip is catching a falling knife. The surplus forecasts are clear—this rally won't last."

On the date of publication, the author had no position in any securities mentioned. This article is for informational purposes only.