Cocoa Slides as Structural Surplus Reshapes Market

Key Takeaways

• Futures down >60% from 2024 peak, now $3,165/tonne
• ICCO forecasts first surplus in four years, 75k tonnes
• Ivory Coast, Ghana cut farmgate prices 57% and 30%
• European, Asian grindings fall 8% and 5% YoY
• Price range $2,849‑$3,303 defines next support/resistance

Summary

ICE cocoa futures slipped to $3,165 per tonne, erasing more than 60% of the 2024 peak that topped $8,000. The International Cocoa Organization confirmed a 75,000‑tonne global surplus for 2024/25, the first in four years, while inventories rose to the highest level in eight months. Ivory Coast and Ghana responded with dramatic farm‑gate price cuts of 57% and 30% respectively, underscoring the supply shock. Meanwhile, European and Asian grindings fell 8% and 5% year‑on‑year, and Barry Callebaut reported a 22% sales decline, weakening demand fundamentals.

Pulse Analysis

The cocoa market has pivoted sharply from a scarcity narrative to an emerging glut. Production across the Ivory Coast, Ghana and other key origins rose 8.4% to roughly 4.7 million tonnes, creating the first confirmed surplus in four years. This surge pushed ICE‑certified inventories above two million bags, the highest in eight months, and forced the two largest exporters to slash farm‑gate prices dramatically. The price correction, now over 60% from its 2024 high, reflects a structural shift rather than a temporary dip.

Demand weakness compounds the supply overload. European grindings dropped 8.3% YoY, marking the weakest fourth‑quarter in a dozen years, while Asian processing fell 4.8% in the same period. Major chocolate maker Barry Callebaut saw cocoa division volumes tumble 22% for the quarter ending November 2024, indicating that higher prices earlier in the year have already curbed consumption. With processors facing tighter margins and no clear demand floor, the surplus is unlikely to be absorbed without a significant price repricing.

Technical analysis shows the contract consolidating between $2,849 and $3,303, with the 50‑day moving average sliding toward $3,628 and the 200‑day near $5,883. A sustained break above $3,303 could spark a corrective rally, but failure to hold $3,031 would reopen downside pressure toward $2,849. For cocoa‑dependent economies and investors, the key risk lies in whether producers can weather prolonged low prices or if a supply‑side shock—such as weather‑related yield drops—might re‑ignite a bullish swing. Monitoring inventory trends, farm‑gate price adjustments, and processor margins will be essential for forecasting the market’s next move.