Cocoa Market Gets Blindsided: Trump's Tariff Move Triggers Biggest Price Collapse

The setup: December cocoa futures just tanked hard. ICE NY cocoa dropped 0.62% while London cocoa slid 1.47% after Trump announced he’d slash reciprocal tariffs on non-US commodities by 10%—cocoa’s taking the hit.

Why it matters: Sounds good on paper (lower tariffs = cheaper cocoa), but here’s the catch—cocoa from Brazil (the world’s 5th-largest producer) still faces a brutal 40% national-security tariff. So the relief is way more limited than traders expected.

The plot twist—supply side is turning bearish too: Ivory Coast, which produces nearly half the world’s cocoa, just reported shipments down 5.7% YoY (516,787 MT vs 548,494 MT last year). Sounds bullish, right? Wrong. Reports from the field show cocoa trees thriving—Mondelez data pegged current pod counts 7% above the 5-year average and “materially higher” than last year. West Africa’s harvesting bumper crops, and farmers are optimistic.

Demand is crashing harder:

• Asia: Q3 cocoa grindings collapsed 17% YoY to 183,413 MT—the worst Q3 in 9 years
• Europe: Q3 grindings down 4.8% YoY to 337,353 MT—lowest third quarter in a decade
• North America: Chocolate candy sales volume tanked over 21% in the 13 weeks ending Sept 7
• Hershey warning: CEO called this Halloween “disappointing”—and Halloween represents 18% of annual US candy sales

Some bright spots (but weak): ICE cocoa inventories at US ports hit a 7.75-month low of 1.77M bags. Nigeria—world’s 5th cocoa producer—is projecting an 11% production drop for 2025/26 (to 305K MT). But these positives are getting crushed under the weight of massive supply and dead demand.

The bigger picture: After 2023/24’s historic 494K MT deficit (biggest in 60+ years), the market swung hard. 2024/25 is now tracking a 142K MT surplus—the first in four years—with production up 7.8% YoY to 4.84 MMT.

Bottom line: Cocoa’s caught in a perfect storm. Tariff cuts remove a bullish catalyst, supply’s peaking, demand’s in a freefall, and the market’s transitioning from severe shortage to surplus territory. Prices still have room to fall.