Cocoa market crash 🚨 Will chocolate prices fall next?
Cocoa futures (COCOA) on the ICE exchange in the US plunged more than 7% today. Fears of a growing supply surplus in the 2025/26 season and widespread liquidation of long positions are driving a sharp price decline. The market has quickly flipped the narrative that dominated 2024 and 2025: significantly improved production prospects (largely thanks to better weather in West Africa, including Côte d’Ivoire and Ghana), rising output in South America, and—above all—weak demand from manufacturers are pushing prices lower. After falling by nearly 50% in 2025, the reversal of the previous uptrend has accelerated at the start of 2026.
What’s driving the cocoa market right now?
Estimated cocoa stockpiles reached 1.1 million tons at the end of the 2024/25 season, 4.2% higher than a year earlier, according to the International Cocoa Organization (ICCO), based on its annual survey. That figure is below the organization’s statistically derived estimate of 1.3 million tons. The result suggests the gap between supply and demand was smaller than the projected 49,000 tons, but inventories still increased meaningfully year-on-year.
Weak processing data signals soft demand
- Europe: -8.3% y/y (worst Q4 in 12 years)
- Asia: -4.8% y/y
- North America: +0.3% y/y (essentially flat)
Will chocolate prices fall?
Earlier cocoa price spikes translated into higher retail chocolate prices, so consumers have been buying less or trading down to cheaper options. For this season, forecasts point to a surplus of 175,000–250,000 tons (or more) thanks to improved growing conditions in West Africa and a recovery in South American production.
- In Côte d’Ivoire, rising inventories and port congestion have been weighing on the physical market, and the government has purchased 123,000 tons of unsold cocoa to stabilize the situation. Farmers have also called for the resignation of the head of the regulator (CCC), alleging bottlenecks in the supply chain.
- There have been no major new weather threats in West Africa, and conditions are expected to improve further.
- Chocolate producers remain in a tricky spot: lower cocoa prices could help margins, but some costs are still “locked in” via forward contracts signed during the price spike. At the same time, consumers are unwilling to keep paying elevated prices.
- Technically, the trend remains clearly bearish, and rising volumes suggest the selloff is broad and forceful. Without a demand rebound or a sudden weather shift, cocoa is likely to remain under fundamental pressure.
- Manufacturers are still grinding expensive beans purchased near the market peak in recent years, which is why many have raised prices, shrunk product sizes, or swapped cocoa butter for cheaper vegetable fats to protect profitability. Will chocolate get cheaper? That looks quite likely—if favorable production conditions persist.
Prices will need to adjust to demand to stimulate consumption again while still keeping processing economically viable. It arguably makes sense for producers to secure supply at meaningfully lower prices and cut retail prices to lift volumes and grindings. Shares of companies such as Hershey, Mondelez, and Barry Callebaut have been trying to stabilize and rebound as the market starts to see a chance of limiting “demand destruction” thanks to lower cocoa prices.
COCOA chart (D1, H4)
Price is testing the lower boundary of a descending price channel today and is trading at a clear discount versus the EMA200 and EMA50 moving averages. RSI points to oversold conditions, and futures are heading for a move of more than 20%—the biggest weekly drop in over 18 months. The drawdown from the highs is now over 65%.
Source: xStation5
Source: xStation5
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