Cocoa Supply Squeeze: ICCO Cut and Index Flows Now

Late-November Shocks Tighten Cocoa Fundamentals

In late November 2025 the cocoa sector saw two concrete developments that directly tightened the supply side and pushed prices higher: the International Cocoa Organization (ICCO) sharply revised its surplus estimate downward, and cocoa’s inclusion in the Bloomberg Commodity Index triggered substantial passive buying pressure. Together these events have shifted the short-term balance between available beans and futures demand, creating a supply squeeze felt from West African export docks to futures desks in London and New York.

What the ICCO Revision Means

Smaller surplus, bigger price sensitivity

On November 28 the ICCO reduced its surplus forecast for the 2024/25 season to just 49,000 tonnes, down markedly from earlier forecasts. The cut reflected weaker-than-expected production growth and a slowdown in grindings—processing volumes that translate beans into chocolate and other products fell, in part because of elevated processing costs.

In plain terms: when estimates shrink from a healthy buffer to a very modest surplus, even small supply disruptions (adverse weather, port congestion, or delayed shipments) can have outsized price effects. For cocoa, where much of the crop is concentrated in a few West African countries, that sensitivity is amplified.

Index Inclusion and Passive Demand

Bloomberg Commodity Index adds structural buyers

Cocoa’s return to the Bloomberg Commodity Index (BCOM) this autumn has real, measurable implications. With cocoa receiving about a 1.7% weighting in the index, passive funds tracking BCOM are expected to purchase roughly $1.9 billion worth of cocoa futures over the implementation window. That kind of mechanically driven demand arrives irrespective of seasonal harvest flows and can absorb available futures liquidity quickly.

When index flows converge with a thinner physical surplus, futures prices can rise rapidly—especially in the front months where deliverable supply and exchange inventories determine near-term settlement levels.

Supply Signals from Ivory Coast and Inventory Data

Export drops and shrinking port stocks

Operational supply signals reinforce the ICCO picture. Ivory Coast—the world’s largest cocoa producer—reported a roughly 24% year-on-year fall in cocoa exports during the recent period. At the same time, ICE-monitored cocoa stocks at U.S. ports have slid to a seven-month low. Lower exports and dwindling exchange-monitored inventories tighten the physical pipeline that underpins futures markets.

Price moves reflect these shifts: December-dated futures climbed to near five-week highs, trading around USD 6,490 per tonne in early November before the recent rally. Despite the recovery, the market remained below year-ago levels—about 11.8% lower on an annual basis—illustrating how quickly sentiment can swing when fresh supply data arrives.

Practical Implications for Stakeholders

Traders and hedgers

For speculators and commercial hedgers, the confluence of a reduced ICCO surplus and index-driven buying increases the probability of short, sharp rallies. Traders should monitor real-time export and port arrival data, the shape of the futures curve (contango vs. backwardation), and roll-demand from index funds. Liquidity can evaporate in stressed moves, so position sizing and stop management are crucial.

Processors and chocolate manufacturers

Processors facing tighter bean availability should revisit forward coverage strategies. When physical supply tightens, premiums on nearby shipments and quality differentials can widen. Securing longer-term contracts or staggered purchases can reduce exposure to price spikes driven by episodic index flows.

Producers and origin stakeholders

For West African farmers and exporters, the near-term price support is welcome but volatile. Export logistics, producer pricing contracts and local currency movements will determine whether farm-gate incomes improve sustainably or whether gains are absorbed by middlemen and transport bottlenecks.

Outlook: Elevated Volatility, Event-Driven Direction

The combination of a dramatically reduced ICCO surplus, index-linked passive buying and tangible signs of tighter physical availability has reintroduced bullish pressure into cocoa. While the market still carries downside risk from weaker global demand or a return to ample harvests, the current setup favors event-driven rallies. Market participants should therefore balance defensive hedging with opportunistic coverage when short-term dislocations emerge.

Data-driven monitoring—ICCO updates, Ivory Coast export statistics, ICE inventory reports, and index rebalancing schedules—will remain the most reliable guideposts for pricing risk in the coming months.

Key data points (late Nov 2025)

• ICCO revised 2024/25 surplus to ~49,000 tonnes (Nov 28).
• Bloomberg Commodity Index inclusion: ~1.7% weighting, ~USD 1.9bn of estimated passive buying.
• Ivory Coast exports down ~24% year-on-year in the most recent period.
• ICE-monitored U.S. port stocks at a seven-month low; front-month futures near five-week highs (~USD 6,490/tonne).

Conclusion

Late-November’s ICCO revision and the structural demand from BCOM inclusion have combined to tighten cocoa’s near-term supply picture. That dynamic is already lifting prices and raising volatility—making careful monitoring and disciplined hedging essential for traders, processors and producers navigating the months ahead.