Cocoa price market analysis in 2025

The cocoa market in 2025 is destined to be distorted or even torn apart. Let’s first look at the New York cocoa futures price at the beginning of the year. On January 9, it still held a high of $10,978 per ton. In sharp contrast, the price at the beginning of 2024 was only $4,826.

Just a few days ago, the International Cocoa Organization (ICCO) issued an industry oversupply warning: the global cocoa supply will exceed demand by 142,000 tons in 2024/25. Then the cocoa futures price fell sharply. On March 4, the New York cocoa futures price fell by nearly 11% to $8,145 per ton. From carnival to labor pains, the cocoa market, which has been hailed as “chocolate gold” in recent times, has experienced a dramatic style switch, which has always made people ponder.

The drastic fluctuations in cocoa prices around the world reflect the deep game of the market. On the one hand, improved weather conditions in the main cocoa producing areas of West Africa, Côte d’Ivoire and Ghana, have boosted production, and the release of production capacity in new planting areas in Latin America and Asia has initially formed a loose supply pattern. In fact, in February this year, the World Bank’s Development Economics Prospects Group predicted that the global cocoa supply situation will improve in 2024/25, especially in Côte d’Ivoire, where favorable weather in the country’s main cocoa producing areas may increase cocoa production by 17%. As more cocoa supplies enter the market, the agency expects cocoa prices to fall by about 13% in 2025 and further fall by 2% in 2026. On the other hand, the hoarding behavior of some companies and the speculation of speculators when cocoa prices climbed, “adding fuel to the fire” on the already tight supply side, causing cocoa inventories in the two major commodity exchanges in London and New York to continue to decline. When speculative capital in the futures market cashed out at high levels and left the market, prices naturally fell sharply.

The price decline is also the result of market self-regulation. Excessive prices have stimulated cocoa farmers to expand production, and new cocoa supplies have continued to pour into the market. However, it takes four years for newly planted cocoa trees to mature, and the short-term production capacity release is limited. In addition, the previous supply gap has accumulated too much, and the current supply growth may still not be enough to completely fill the inventory shortage. The market will take some time to recover. At the same time, the high cocoa prices have also deterred many downstream companies and consumers, which has suppressed market demand to a certain extent. The price drop is the result of market adjustments.

For downstream industries, the sharp fluctuations in cocoa prices are like a double-edged sword. In the past year, many companies have achieved revenue growth by raising product prices, but at the cost of shrinking demand. Hershey’s annual financial report shows that in 2024, Hershey’s sales growth slowed down, but profitability was good; in terms of chocolate business, in 2024, in its main market, the United States, due to the decline in the share of daily chocolate products, the market share of candy, mints and chewing gum business fell by 18 basis points. Mondelēz International’s annual report shows that in 2024, Mondelēz International’s overall price rose by 5.3% and sales fell by 1%. Mondelēz International expects that cocoa prices will cause its adjusted earnings per share to fall by about 10% in 2025.

Although large brands can adapt to and absorb these costs, this is more likely to mean catastrophic consequences for small brands. Small and medium-sized enterprises lack hedging tools. For example, in Australia, many chocolate manufacturers are on the verge of bankruptcy in 2024.

Entering 2025, downstream industry manufacturers generally face more severe choices: if they maintain high prices, it may accelerate consumers’ shift to low-priced alternatives; if they switch to price cuts for promotions, they will have to bear the dual pressures of raw material costs and futures hedging failure. The huge shock in the cocoa market price has prompted downstream companies to re-examine the supply chain. Based on this, companies have begun to diversify their procurement and reduce their dependence on a single production area in West Africa; in addition, companies are actively exploring cocoa substitutes. Manufacturers are also actively strengthening cooperation with suppliers in order to establish a long-term and stable supply relationship and further optimize inventory management.

Looking ahead to 2025, the global cocoa market is gradually moving towards a new balance against the backdrop of oversupply: the rational return of prices and the steady increase in supply have brought opportunities for adjustment and development to the downstream market. However, multiple existing challenges still exist, such as the potential threat of weather changes to cocoa production and price fluctuations that may be caused by market speculation. As an industry analyst said, “The current price correction is just a halftime break, not the end.” In the future, the cocoa market will fluctuate repeatedly between the expectation of oversupply and the hidden shortage, and the downstream industry will also need to strive to find a new balance between cost control and consumer experience in price fluctuations.