June 25, 2025 – Market Analysis

The global cocoa market is experiencing a significant shift as improved weather conditions in West Africa begin to ease supply concerns that have dominated the commodity throughout 2024 and early 2025. Recent rainfall patterns and encouraging pod count reports suggest the “silly season” in cocoa may finally be moderating, though fundamental challenges remain.

Key market developments

Weather patterns turn favorable Critical rainfall during June’s peak precipitation period has supported crop development across major West African producing regions. Early pod count data indicates more normalized crop development patterns, aligning with historical averages for the upcoming harvest season beginning in October.

Price volatility continues London cocoa futures (September contract) declined 9.8% versus the previous week, falling £611, while New York futures dropped 8.7% or $783. Over a two-week period, London futures have decreased 15.5% and New York futures 13.5%, reflecting rapidly changing market sentiment as supply outlook improves.

Demand dynamics shift Consumer goods companies continue implementing rationing strategies including price increases, product reformulations, reduced promotions, and shrinkflation tactics. These demand-side adjustments, combined with improving supply prospects, have introduced the possibility of a market surplus for the 2025/26 season.

Supply Chain Challenges Persist

Despite recent positive developments, structural issues continue to impact the market:

Smuggling Operations Intensify Significant cocoa volumes are being smuggled from regulated markets in Ivory Coast and Ghana to neighboring countries offering higher prices. Analysis suggests approximately 100,000 metric tons were smuggled out of Ivory Coast last season, with Guinea’s cocoa shipments increasing dramatically despite limited domestic production expansion.

Financial pressures mount Ghana’s COCOBOD faces severe financial strain with debt exceeding $3 billion and $942 million due by September 2025. Forward sales contracts locked at below-market prices have resulted in approximately $840 million in revenue losses, with additional rollover contract losses projected at $495 million.

Production targets missed Ghana has consistently failed to meet production targets over three consecutive years, with output declining nearly 50% during this period. The country’s 2024/25 season target of 610,000 metric tons is expected to fall short by approximately 4%.

Market outlook and risk factors

While improved crop prospects provide some optimism, several factors maintain market uncertainty:

  • Weather dependency: Continued favorable conditions are required through the remaining crop development months
  • Mid-crop uncertainty: No visibility yet on next year’s mid-crop performance
  • Regulatory challenges: Ongoing issues with forward selling programs in key producing countries
  • Geopolitical risks: Macroeconomic uncertainty and inflationary pressures continue to impact demand

Exchange and inventory data

Certified London exchange stocks remained relatively stable at 42,790 metric tons, while ICE New York stocks increased to 152,000 metric tons (2.34 million bags), reaching a 9-month high after falling to 21-year lows in January.

Open interest data shows continued low market participation, with combined London and New York positions at their lowest levels in over 20 years, indicating reduced liquidity and increased volatility potential.

Investment implications

The current market environment presents both opportunities and risks for industry participants. Managed money positions have decreased, with speculators reducing long positions as fundamental outlooks improve. However, the chocolate confectionery industry faces complex buying decisions in a market characterized by improved near-term prospects but persistent structural challenges.

Read the full Cocoa market analysis on the Vesper platform here: https://app.vespertool.com/market-analysis/2032