Key takeaways
- Cocoa prices are falling on the back of softer industrial demand as manufacturers grapple with higher costs and tighter margins.
- On the supply side, cocoa production is expected to ramp up during the 2025/2026 season as weather conditions improve and new plantings in Ecuador reach maturity.
- Despite the recent downtrend, J.P. Morgan Global Research expects cocoa prices to remain structurally higher for longer at $6,000/tonne.
- The chocolate industry could raise confectionery prices as a result, with an adverse impact on sales volumes.
After reaching historical highs of over $12,000/tonne at the end of last year, cocoa prices have since plunged to below $8,000/tonne and are leading the losses across agricultural markets through 2025. What’s fueling this downtrend, and what does this mean for consumers?
“The hangover from last year’s fourth-quarter highs in cocoa prices has come to roost, and the long-awaited cocoa grind data has confirmed the demand destruction widely reported by the industry in recent months.”
Tracey Allen
Agricultural commodities strategist, J.P. Morgan
Why are cocoa prices coming down?
Cocoa prices are falling on the back of softer industrial demand as manufacturers grapple with higher costs and tighter margins. Cocoa grindings — traditionally seen as a key measure of demand for cocoa — for the second quarter of 2025 declined by -7.2% year-over-year in Europe, -16% in Asia and -2.8% in North America.
“The hangover from last year’s fourth-quarter highs in cocoa prices has come to roost, and the long-awaited cocoa grind data has confirmed the demand destruction widely reported by the industry in recent months,” said Tracey Allen, agricultural commodities strategist at J.P. Morgan. “This reflects a historic increase in the cost of doing business and a decline in cocoa bean availability, which has weakened industrial demand in an environment where cost pass-through is often limited by supermarkets and retailers.”
Looking at the second half of 2025, grind prints will likely remain seasonally soft due to depleted cocoa inventories. “A recovery in global cocoa demand, albeit off multi-year lows, is unlikely until there is a major improvement in supply and available stocks,” Allen said.
However, cocoa production is expected to ramp up during the 2025/2026 season as weather conditions improve, potentially exerting further downward pressure on prices. In particular, increased rainfall in West Africa — a major cocoa-producing region — could boost crop yields.
“While very preliminary and highly weather-dependent, ongoing supply-side improvements are expected through the 2025/2026 season, with continued recovery across West Africa and ongoing expansion of production in Ecuador,” Allen said.
Cocoa grindings in Europe have declined
Cocoa grindings in Europe declined by -7.2% year-over-year in the second quarter of 2025.
The decline in cocoa grindings is even more pronounced in Asia
Cocoa grindings in Asia collapsed by an outsized -16% year-over-year in the second quarter of 2025, some -13% below average industry expectations.
What’s the longer-term outlook for cocoa prices?
Despite the recent downtrend, J.P. Morgan Global Research expects cocoa prices to remain structurally higher for longer. “Amid multi-season availability constraints, we hold our medium-term price forecast at $6,000/tonne while the market finds balance, which is likely to be approaching in 2025/2026,” Allen said.
The sharp break lower in cocoa prices through July is presenting consumers with the opportunity to add to forward price coverage at some of the lowest levels in eight months, while producer pricing for the new crop is still underway. This could improve liquidity in the cocoa market, which could in turn stabilize cocoa prices in the medium term.
What does this mean for the chocolate industry?
Chocolate prices have increased in recent months as producers pass on higher cocoa costs to consumers, and volumes have fallen as a result.
“The global chocolate market has seen a decline in volumes as prices increase, with private labels gaining market share among price-sensitive consumers, while the premium segment continues to expand,” said Celine Pannuti, head of European Staples & Beverages at J.P. Morgan. “Some of the volume weakness for some players was attributable to temporary factors, but we also see this as reflective of higher elasticity pressures in the chocolate market that may build with still higher pricing in the second half of the year.”
Indeed, if cocoa prices remain structurally higher for longer, chocolate products could become even more expensive, leaving a bitter taste in consumers’ mouths. “With the chocolate industry set to raise prices potentially by the teens this year, we expect volumes to remain pressured,” added Edward Hockin, part of the European Staples team at J.P. Morgan.
Related insights
-
Global Research
Mid-year market outlook 2025: A broad spectrum of potential outcomes
July 01, 2025
The persistent backdrop of policy uncertainty, coupled with geopolitical risks, portends increased macroeconomic volatility for the second half of the year. What’s the outlook for equities, commodities, currencies, emerging markets and more?
-
Global Research
Cautious on copper: The outlook for an unwinding market
July 24, 2025
J.P. Morgan Global Research was already cautious on copper. Now, a 50% tariff could help propel the market toward a “period of payback.”
-
Global Research
Global Research
Leveraging cutting-edge technology and innovative tools to bring clients industry-leading analysis and investment advice.
This communication is provided for information purposes only. Please read J.P. Morgan research reports related to its contents for more information, including important disclosures. JPMorgan Chase & Co. or its affiliates and/or subsidiaries (collectively, J.P. Morgan) normally make a market and trade as principal in securities, other financial products and other asset classes that may be discussed in this communication. This communication has been prepared based upon information, including market prices, data and other information, from sources believed to be reliable, but J.P. Morgan does not warrant its completeness or accuracy except with respect to any disclosures relative to J.P. Morgan and/or its affiliates and an analyst's involvement with any company (or security, other financial product or other asset class) that may be the subject of this communication. Any opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This communication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. J.P. Morgan Research does not provide individually tailored investment advice. Any opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. You must make your own independent decisions regarding any securities, financial instruments or strategies mentioned or related to the information herein. Periodic updates may be provided on companies, issuers or industries based on specific developments or announcements, market conditions or any other publicly available information. However, J.P. Morgan may be restricted from updating information contained in this communication for regulatory or other reasons. Clients should contact analysts and execute transactions through a J.P. Morgan subsidiary or affiliate in their home jurisdiction unless governing law permits otherwise. This communication may not be redistributed or retransmitted, in whole or in part, or in any form or manner, without the express written consent of J.P. Morgan. Any unauthorized use or disclosure is prohibited. Receipt and review of this information constitutes your agreement not to redistribute or retransmit the contents and information contained in this communication without first obtaining express permission from an authorized officer of J.P. Morgan.