Cocoa Futures Fall as Weak North American Demand Offsets Strong Asian and European Processing

Cocoa futures slid sharply on Friday after new industry data revealed an unexpected contraction in third-quarter North American processing. December NY cocoa futures dropped 3.19% to settle at $5,645 per metric ton after the National Confectioners Association reported that North American cocoa grindings fell 2.5% year-over-year to 109,978 metric tons, missing expectations of flat growth. Rising inventory levels added further downward pressure, with stockpiles tracked by the exchange reaching a 2.25-year high of 3,593,964 bags.

The weak North American processing numbers highlight ongoing difficulties for chocolate producers struggling to pass elevated cocoa costs to end consumers. Cocoa processor Cargill recently reported quarterly mark-to-market losses on cocoa, pointing to margin pressures across the supply chain. The pullbacks in North America contrasted with stronger demand signals from other regions, as third-quarter cocoa grindings unexpectedly jumped 29% in Asia to 233,767 metric tons and rose 3.2% in Europe to 348,215 metric tons.

Looking ahead, investors are weighing short-term demand weaknesses against severe medium-term supply threats across West Africa. Heavy rains in the Ivory Coast have disrupted harvesting and logistics, while a powerful El Niño climate pattern threatens future crop yields in both the Ivory Coast and Ghana through drier conditions and disease spread. Survey projections for the 2026/27 harvest year signal potential crop reductions of 13% to 18% in key producing nations, which could restrict market supplies despite recent increases in port shipments.