The global cocoa market is shifting from a period of record-high deficits to a consecutive surplus as prices collapse nearly 70% from their peak. Regulators in Ghana and Ivory Coast, previously "distressed shorts" who sold too early during the price explosion, are now "distressed longs" holding unsold volumes in a declining market. This downturn is driven by a 5% drop in European chocolate demand, the failure of a projected $25,000 price target, and managed money maintaining net short positions. Ghana has responded to the crisis by slashing farmgate prices by 29% to $3,600 per ton and proposing a new model that links farmer pay directly to international levels. While FMCG companies remain burdened by expensive hedges, a full demand recovery is unlikely before late 2026. Stability depends on West African regulators reducing their exposure and allowing market dynamics to reach a natural floor.
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