May ICE NY cocoa (CCK26) on Tuesday closed up +55 (+1.73%), and May ICE London cocoa #7 (CAK26) closed up +34 (+1.44%).
Cocoa prices settled higher on Tuesday amid short-covering, spurred on by concerns that the closure of the Strait of Hormuz will lead to a fertilizer shortage in West Africa ahead of the upcoming planting season. The Gulf region is a major fertilizer exporter, and about 30% of the world’s total fertilizer supply passes through the Strait.
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Last Friday, cocoa prices tumbled to a 2-week low on the outlook for a bumper West African cocoa crop. Farmers in the Ivory Coast and Ghana have reported that consistent rains have boosted pod development on cocoa trees.
Ample supplies are also weighing on cocoa prices, as ICE cocoa inventories rose to a 7.75-month high of 2,348,743 bags on Tuesday.
Last month, Ghana cut the official price it pays its cocoa farmers by nearly 30% for supplies for the 2025/26 growing season, and the Ivory Coast also said it would cut cocoa farmer pay by 57% that would kick in for the mid-crop harvest that started this month. The Ivory Coast and Ghana produce more than half of the world’s cocoa.
Cocoa prices have also seen some support over the past three weeks as the closure of the Strait of Hormuz has reduced fertilizer supplies, boosted global shipping rates, insurance costs, and fuel prices, thereby raising cocoa importers’ costs.
In addition, slowing cocoa deliveries to ports in the Ivory Coast is supportive of prices. Monday’s cumulative data from the Ivory Coast showed that farmers shipped 1.39 MMT of cocoa to ports in the current marketing year (October 1, 2025, through March 22, 2026), down 2.8% from 1.43 MMT in the same period a year ago.
Demand concerns have hammered cocoa prices as consumers continue to balk at the high price of chocolate. On January 28, Barry Callebaut AG, the world’s largest bulk chocolate maker, reported a -22% decline in sales volume in its cocoa division for the quarter ending November 30, citing “negative market demand and a prioritization of volume toward higher-return segments within cocoa.”
Grinding reports also showed weak demand. On January 15, the European Cocoa Association reported that Q4 European cocoa grindings fell -8.3% y/y to 304,470 MT, a bigger decline than expectations of -2.9% y/y and the lowest for a Q4 in 12 years. On December 16, the Cocoa Association of Asia reported that Q4 Asian cocoa grindings fell -4.8% y/y to 197,022 MT. Also, the National Confectioners Association reported Q4 North American cocoa grindings rose only +0.3% y/y to 103,117 MT.
Also undercutting cocoa prices are higher exports from Nigeria, the world’s fifth-largest cocoa producer. On February 17, Bloomberg reported that Nigerian Dec cocoa exports rose +17% y/y to 54,799 MT. Nigeria’s Cocoa Association projects that Nigerian cocoa production in 2025/26 will fall by -11% y/y to 305,000 MT, from a projected 344,000 MT for the 2024/25 crop year.
On the bullish side, the Ivory Coast said its cocoa production in 2025/26 would fall -10.8% y/y to 1.65 MMT from 1.85 MMT in 2024/25. On February 10, Rabobank cut its 2025/26 global cocoa surplus estimate to 250,000 MT from a November forecast of 328,000 MT.
As a bearish factor, the International Cocoa Organization (ICCO) on March 2 raised its global 2024/25 cocoa surplus estimate to 75,000 MT from 49,000 MT in November, which was the first surplus in four years. ICCO estimated that global cocoa production in 2024/25 climbed by +8.4% y/y to 4.7 MMT. Looking ahead, StoneX on January 29 forecasted a global cocoa surplus of 287,000 MT in the 2025/26 season and a 267,000 MT surplus for 2026/27.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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