Cocoa Futures Rally on Mixed Market Signals as West African Supply Tightens

On Monday, cocoa futures markets delivered an unexpected reversal after weeks of decline. March ICE NY cocoa closed up 147 points (+3.50%), while March ICE London cocoa finished +73 points (+2.43%), marking a significant bounce from recent lows. Just days earlier, nearest-futures contracts had touched their lowest levels in over two years, signaling market capitulation among traders. Yet this rebound masks a complex interplay of competing forces shaping the commodity’s near-term trajectory—a dynamic that warrants closer examination for anyone tracking these market developments through market analysis platforms and trading communities.

Producer Supply Restraint and Currency Tailwinds Support Prices

The immediate catalyst for Monday’s rally was straightforward: West African cocoa producers deliberately restricted shipments to port facilities, capitalizing on the opportunity to hold inventory rather than accept depressed prices. According to cumulative shipping data through January 25, 2026, Ivory Coast farmers—representing the world’s largest cocoa production base—moved 1.20 million metric tons (MMT) to ports during the current marketing season (starting October 1, 2025), down 3.2% from 1.24 MMT during the same period the prior year.

Currency dynamics also played a supporting role. A softer US dollar environment reduced friction for non-dollar-based producers and importers, technically lowering the effective cost of cocoa for international buyers while making exports more attractive to sellers in weaker-currency regions. This combination of supply withholding and favorable foreign-exchange conditions provided the fundamental underpinning for the price recovery observed in early February 2026.

Demand Crisis Deepens Across Major Consumer Regions

Despite the price rebound, the fundamental demand picture remains deeply troubling. Barry Callebaut AG, the world’s single largest bulk chocolate manufacturer, reported a stark 22% volume decline in its cocoa division for the quarter ending November 30, explicitly citing “negative market demand and prioritization toward higher-return segments.” This casualty of consumer price resistance rippled through grinding activity globally.

European cocoa grindings—a key barometer of regional chocolate and confectionery production—contracted 8.3% year-over-year in Q4 to just 304,470 MT, significantly worse than anticipated declines of 2.9% and marking the weakest fourth-quarter performance in 12 years. Asian grindings similarly retreated 4.8% year-over-year to 197,022 MT, while North American grindings managed only a tepid 0.3% year-over-year gain to 103,117 MT. This grinding data confirms that elevated cocoa futures prices have effectively priced consumers out of the market, creating demand destruction across all major consumption hubs.

Global Inventory Buildup Creates Long-Term Pressure

While near-term supply tightness from producer holdback provides price support, longer-term fundamentals paint a more sobering picture. The International Cocoa Organization reported that 2024/25 global cocoa stocks rose 4.2% year-over-year to 1.1 MMT—a substantial accumulation that offsets any transient supply constraints. On the US domestic front, ICE-monitored inventories at American ports rebounded to a two-month high of 1,752,451 bags on Thursday, February 1, 2026, climbing from a 10.25-month low of 1,626,105 bags recorded on December 26. This inventory recovery—typically bearish for commodity prices—underscores the persistent structural imbalance between available supplies and deflated end-user demand.

Production Outlook: A Turning Point in the Cycle

The global production landscape is shifting toward greater balance after years of undersupply. In May 2024, the ICCO had revised its 2023/24 deficit to a staggering negative 494,000 MT, the worst shortfall in more than 60 years, driven by a 12.9% year-over-year production collapse to 4.368 MMT. However, 2024/25 now shows signs of recovery: ICCO estimated 2024/25 global cocoa production at 4.69 MMT, a 7.4% year-over-year increase, yielding the organization’s first projected surplus in four years at 49,000 MT.

This production recovery reflects more favorable growing conditions unfolding across West Africa. Tropical General Investments Group noted that favorable agronomic conditions in Ivory Coast and Ghana are expected to bolster the February-March harvest, with farmers reporting larger and healthier cocoa pods relative to the previous season. Chocolate manufacturer Mondelez corroborated this outlook, reporting that the current cocoa pod count in West Africa stands 7% above the five-year average and “materially higher” than the prior-year crop. The Ivory Coast’s main harvest has commenced, and farmer sentiment about pod quality remains optimistic.

However, supply-side headwinds persist elsewhere. Nigeria, the world’s fifth-largest cocoa producer, exported just 35,203 MT in November 2025—a 7% year-over-year decline. More concerning, Nigeria’s Cocoa Association projects that 2025/26 production will plummet 11% year-over-year to 305,000 MT from an anticipated 344,000 MT in the current 2024/25 season. This contraction in one of the sector’s traditionally important producers could partially offset West African gains.

Forward-looking consensus forecasts reflect cautious reassessment. Rabobank recently trimmed its 2025/26 global cocoa surplus projection to 250,000 MT from a November estimate of 328,000 MT, signaling tighter fundamental balances than previously anticipated. Yet even at 250,000 MT, a sizable surplus implies continued downward pressure on cocoa futures prices relative to the multi-year highs seen during the acute deficit phases of 2023 and 2024.

The Bottom Line: Temporary Rally Within a Structurally Weak Cycle

The February 2026 rebound in cocoa futures represents a tactical correction rather than a fundamental reversal. Transient factors—producer supply withholding, dollar softness, and technical short-covering—have provided immediate relief. However, the persistent erosion of end-user demand, the normalization of global inventories, and the re-emergence of production surpluses all suggest that the multi-year rally in cocoa futures commodities has peaked. While prices may find support on supply-side disruptions or short-term technical bounces, the structural backdrop favors eventual repricing lower as the market absorbs the reality that global cocoa production is recovering while consumer chocolate consumption remains under pressure from record-high prices.