Core Viewpoint - The global cocoa market is expected to shift from a supply shortage to a surplus by the 2025/2026 season, as indicated by recent reports from major institutions like Rabobank and Fitch Solutions [4][6]. Supply Side - The end of the El Niño phenomenon, which caused disastrous harvests in West Africa, is being replaced by La Niña, leading to more stable rainfall in key cocoa-producing regions like Côte d'Ivoire and Ghana. This climatic shift is expected to increase cocoa bean production in the 2025/26 season [8]. - High cocoa prices in 2024, despite limited profits for farmers, have encouraged some reinvestment in farming practices, including increased use of fertilizers and pesticides, which may boost production [8]. Demand Side - The high prices of cocoa have led to a significant decline in global chocolate sales by volume in 2025, as consumers and brands are deterred by retail prices [10]. - Brands are forced to permanently alter their recipes to reduce expensive cocoa content, substituting with cheaper fillers like nuts, wafers, caramel, and palm oil [10]. Price Dynamics - Despite the anticipated surplus, chocolate prices are unlikely to decrease in the near term due to several factors: - Brands are still clearing out high-cost inventory purchased at prices around $10,000 per ton [16]. - Price rigidity means that once prices have increased, they rarely decrease, as consumers have accepted higher price points [16]. - Brands are focused on recovering profit margins that were squeezed by high costs over the past year, rather than passing savings onto consumers [18]. Conclusion - The transition from high prices to surplus presents different outcomes for various stakeholders: - Farmers may face new challenges as they have increased investments without yet seeing profits [22]. - Brands are entering a period of profit recovery after enduring high costs [22]. - Consumers may see a pause in the trend of "shrinkflation," where product sizes decrease without a corresponding price drop [22]. - Overall, the industry may have entered a "high-price chocolate" era, with little hope for significant price reductions in the future [24].