The cocoa market has experienced significant volatility in recent weeks, with futures prices in London and New York undergoing sharp swings. Despite these dramatic price movements, the overall market trend has remained relatively stable compared to previous months. A shift in market sentiment is underway, with tightening cocoa supply concerns competing against the possibility of declining chocolate demand.
Cocoa supply dynamics: Ivory Coast and Ghana’s 2025/26 crop outlook
The Ivory Coast cocoa crop, once feared to be weak, is showing better-than-expected results, with government crackdowns on smuggling contributing to increased visible arrivals. Meanwhile, high financing costs and record cocoa prices have incentivized farmers and traders to sell beans at market prices, leading to weaker differentials and pressuring spot futures. While this has resulted in a softer market tone, any unexpected supply changes could reverse this trend.
Key cocoa origins such as Ivory Coast and Ghana remain undersold for the 2025/26 cocoa crop, with physical market players hesitant to take on margin risks. This reluctance means forward sales are likely to remain low, increasing reliance on spot trading—putting pressure on chocolate manufacturers.
Cocoa stocks and climate change concerns
From a supply perspective, certified cocoa stocks in London are at historically low levels, while New York cocoa stocks are nearing two-decade lows. At the same time, cocoa arrivals in the Ivory Coast are up over 21% compared to the previous season, offering some relief. However, climate change continues to pose a major threat to cocoa production, with rising temperatures and arid conditions threatening the stability of future crop yields.
Demand side of the Cocoa market: mixed signals for chocolate consumption
On the demand side, chocolate consumption presents mixed signals. While certain segments report increased chocolate sales, others are struggling with declining unit volumes. Hershey’s recent earnings report highlighted both the impact of soaring cocoa prices and the growing use of cocoa butter alternatives, which are reshaping the market. As price pressures continue to mount, the cocoa industry faces the dual challenge of navigating shifting consumer preferences and rising production costs.
To stay competitive, chocolate manufacturers must carefully manage the delicate balance between cocoa supply constraints and shifting consumer demand. With cocoa futures volatility, tight supplies, and changing market dynamics, understanding these factors will be crucial for anyone involved in the cocoa and chocolate industries.
The future of cocoa: navigating volatility and demand challenges
For a deeper dive into the cocoa market’s challenges and opportunities, read our full cocoa market analysis here.