Cocoa prices are under pressure due to better-than-expected harvests in West Africa, prompting analysts to revise their deficit forecasts for the 2025/26 season. This improved supply has particularly impacted futures prices, while weaker demand from food manufacturers, who have adjusted formulations to cope with previous high prices, further compounds the situation. Despite falling raw material costs, chocolate prices in retail have not yet declined, largely due to long-term contracts and manufacturers’ hesitance to revert to previous formulations.
Weather conditions in Ivory Coast, the world’s largest cocoa producer, are concerning, with below-average rainfall reported in key growing regions. This could hinder mid-crop development, which runs from March to August, potentially affecting future supply. Farmers are currently facing deteriorating soil moisture, raising concerns about the upcoming harvest’s viability.
For market professionals, the key takeaway is that while supply conditions appear favorable in the short term, ongoing weather risks and weak demand could create volatility in cocoa prices. Monitoring rainfall patterns and demand trends will be crucial for anticipating future price movements.
Source: xtb.com