West African Cocoa Supply Squeeze Sends Futures Soaring to 2-Week Peak

Cocoa futures markets are on fire this week, with March contracts delivering explosive gains across global exchanges. New York ICE cocoa (CCH26) surged +295 points to close +4.96% higher, while London ICE cocoa (CAH26) jumped +275 points for a +6.52% gain—marking cocoa’s strongest two-week performance. Behind this rally lies a critical supply story that traders can’t ignore.

Ivory Coast Port Activity Reveals Tightening Supplies

The real catalyst hitting cocoa bulls hardest? Slowing shipment volumes from the world’s premier cocoa producer. During the week ending Dec 28, Ivory Coast farmers delivered just 59,708 MT of cocoa to ports—a shocking 27% decline year-over-year. This port slowdown signaled immediate alarm bells across commodity trading floors about constrained global supplies heading into peak demand season.

Looking at the broader picture, cumulative shipments through December 28 tell an even bleaker story for supply optimists. Ivory Coast moved 1.029 MMT to ports during this marketing year (Oct 1 through Dec 28), down 2.0% compared to 1.050 MMT in the same period last year. With Ivory Coast commanding roughly 30% of global cocoa production, any disruption ripples through the entire chocolate manufacturing ecosystem.

What’s Pushing Prices Higher: The Confluence of Bullish Factors

Multiple forces are converging to support higher cocoa valuations. First comes index rebalancing: cocoa futures gained Bloomberg Commodity Index (BCOM) inclusion starting January, triggering analyst estimates of as much as $2 billion in passive buying pressure on New York cocoa futures alone. That’s material support that isn’t going away.

Second, physical cocoa inventory levels are dropping dangerously low. ICE-monitored stockpiles at US ports hit a 9.5-month low last Friday at just 1,626,105 bags. Tighter warehouse levels always correlate with price appreciation, especially when combined with slowing production data.

But Weather Provided Recent Relief—Until Reality Set In

Ironically, favorable weather in West Africa had actually dampened prices in recent weeks. Farmers reported that consistent rain and sunshine in Ivory Coast boosted cocoa tree blooming, while Ghana received regular moisture supporting pod development ahead of the harmattan dry season. Chocolate manufacturer Mondelez even noted that current pod counts in West Africa sit 7% above the five-year average—materially higher than last year’s crop.

Yet this temporary supply comfort collapsed once December shipment data confirmed the port slowdown. The story shifted from “abundant supply coming” to “supply tightening now.”

Global Supply Deficit Concerns Resurface

International market observers have already sounded the alarm. The International Cocoa Organization (ICCO) slashed its 2024/25 surplus estimate down to just 49,000 MT (from 142,000 MT previously) and cut production forecasts to 4.69 MMT from 4.84 MMT. Rabobank followed suit, trimming its 2025/26 surplus projection to 250,000 MT from 328,000 MT.

These downgrades reverse four years of deficit psychology. After ICCO’s May 30 revision pegged 2023/24 as a deficit of -494,000 MT (the worst in 60+ years), traders had been bracing for continued scarcity. Now 2024/25 shows the first surplus in four years, but that surplus keeps shrinking with each new forecast.

Demand Weakness Remains the Shadow Over Rallies

Here’s the complication: global cocoa grinding data reveals concerning weakness. Asia’s Q3 cocoa grindings collapsed 17% year-over-year to 183,413 MT—the smallest third-quarter volume in 9 years. Europe followed with a -4.8% decline to 337,353 MT, marking its lowest Q3 in a decade. North American grindings posted +3.2% growth, but data distortions from new reporting companies skew the picture.

This demand weakness is the reason cocoa rallies have struggled to stick, even with supply tightening.

Nigeria’s Production Decline Adds Fresh Support

A separate bullish signal comes from Nigeria, the world’s fifth-largest cocoa producer. The Nigerian Cocoa Association projects 2025/26 production will fall 11% year-over-year to 305,000 MT from 344,000 MMT expected for 2024/25. September exports held flat at 14,511 MT, suggesting production constraints—not just timing—are responsible for the slowdown.

The Bottom Line for Cocoa Traders

With Ivory Coast port arrivals decelerating, BCOM index inclusion driving passive buying, warehouse inventories shrinking, and Nigeria cutting production outlooks, the supply backdrop for cocoa has clearly shifted. Yes, demand remains sluggish and favorable weather lingers, but the price action today confirms that supply anxiety has seized control of the narrative. Investors watching cocoa exposure should monitor Ivory Coast shipment data closely in coming weeks—that metric has become the single best indicator of where futures are headed next.