• Cocoa prices fell 12% in September to US$6,936, easing costs for chocolate makers after a year of record highs.
• Supply remains fragile in West Africa, with aging trees and climate risks threatening yields and future prices.
• Carbon rules and farm finance needs are reshaping the cocoa trade, with premiums emerging for low-emission beans.

Cocoa prices have finally cooled after a year of relentless gains. For chocolate makers, the pullback offers a rare dose of breathing room. However, beneath the surface, climate volatility, aging orchards, and looming carbon accounting rules are tightening their grip on the industry. After touching historic highs above US$8,000 a tonne in mid-September 2025, New York cocoa futures fell roughly 12% in the two weeks through September 26, settling at US$6,936—their lowest level since late 2024.

The slide eases pressure on companies such as Mondelez International, which warned earlier this year that sustained bean inflation could shave up to 10% off 2025 adjusted earnings per share. Analysts caution, however, that the sell-off reflects improved weather and profit-taking rather than any structural improvement in supply security.

Improved rainfall across southern Ghana and western Côte d’Ivoire in August and early September has raised expectations for the 2025/26 main crop. Private surveyors now pencil in a Ghana harvest of 640,000 to 650,000 tonnes, above Cocobod’s official target of 612,000 tonnes. The International Cocoa Organization echoed that “cautious optimism” in its September 20 bulletin, prompting speculative funds to trim long positions. Talk of a possible U.S. tariff exemption briefly circulated on September 9, but no official order followed. Traders say any impact from Washington was more sentiment-driven than material. “This was always a weather-led move,” one European dealer said. “Rainfall, not politics, brought prices down.”

More than 90% of the global cocoa supply still originates from a narrow belt across Ghana and Côte d’Ivoire, where the average cocoa tree is over 25 years old and the swollen-shoot virus is spreading. Climate Week briefings in New York warned that if the minor-dry season from November to January lasts longer than usual, yields could fall 8 to 10%, quickly sending futures back above US$7,500. “The supply base hasn’t become any less fragile,” said a London-based cocoa analyst. “It’s a textbook weather market, not a solved balance sheet.”

Carbon Costs Enter the Market Equation

At the end of August, the World Cocoa Foundation and consultancy Quantis released the industry’s first greenhouse-gas accounting manual. The framework provides companies with a consistent method for calculating CO₂-equivalent emissions per ton of cocoa, encompassing all aspects from farm inputs to shipping. Although raw beans are not yet included in the European Union’s Carbon Border Adjustment Mechanism, chocolate products could be added in a future phase. European buyers are already requesting “carbon-labelled” lots.

Forward contracts for beans verified at under 2.5 tonnes of CO₂ equivalent per tonne are fetching premiums of US$80 to US$150, with niche deals discussed at US$100 to US$300 for 2026 delivery. Conventional beans still trade at par, but financiers are beginning to attach higher borrowing costs to supply chains linked to deforestation.

Mondelez, which purchases approximately 400,000 tonnes of beans annually, states that it will integrate the WCF-Quantis standard into its sourcing guidelines and is currently piloting low-carbon beans for coverage in 2026. The company hasn’t disclosed how much of its future needs will be met through these contracts. “A tonne of cocoa is no longer just a tonne—it’s a tonne plus its carbon footprint,” one European commodity consultant said.

ICCO’s modest surplus forecast for 2025/26 assumes the broader adoption of climate-smart practices, such as shade tree planting and more efficient fertilizer use. On-farm packages tested in Ghana and Côte d’Ivoire cost between US$120 and US$180 per hectare, partly subsidized; however, upfront cash remains scarce for the average two-hectare grower.

Pre-harvest finance schemes run by Barry Callebaut, Cargill, and Olam covered roughly 350,000 hectares last season. Mondelez supports similar efforts through its Cocoa Life program but has yet to announce new funding for the 2025/26 period. Pilot projects in Ghana have increased yields by about 15%, but without scaled-up credit, the gains could prove fleeting. Any stall in financing would risk pushing the market back into backwardation—where near-term prices exceed long-dated futures—by mid-2026.

Price-Sensitive Demand and Investor Signals

On the demand side, high prices earlier this year triggered a sharp pullback in processing. Global grindings fell 4.8% in the second quarter, with Asia down a record 16% as processors idled plants. Lower futures are now encouraging buyers to rebuild inventories, but the market remains sensitive. “If prices move above US$7,500 again, you’ll see fresh destocking and substitution,” said an Asian cocoa trader. Mass-market chocolate is highly elastic; only premium segments have maintained steady volumes.

The price break is also giving investors mixed signals. On the bullish side, Northside Capital Management disclosed an 80,670-share purchase in Mondelez during the second quarter, a stake worth US$5.4 million at quarter-end. Mondelez itself demonstrated confidence by raising its quarterly dividend by 6% in July, marking its 13th consecutive annual increase.

But analysts remain cautious. Evercore ISI trimmed its Mondelez price target by $ 1 to $ 72 on September 24, citing underappreciated compliance costs associated with traceability and emissions reporting. Those systems could add 2-3% to procurement spend. Consensus forecasts still point to US$75 a share, but the wide range—from US$58 to US$84—reflects the tension between near-term relief and longer-term obligations.

For chocolate makers, US$6,900 cocoa is a welcome pause. Futures at these levels allow for margin recovery and hedging against future volatility. The structural challenges, however, remain visible: aging orchards in West Africa, weather risks that can swing yields by double digits, limited farmer financing, and a new carbon-accounting framework that is beginning to reshape trade flows.

Lower prices are encouraging buyers to rebuild inventories. Still, the durability of the relief depends on the weather in the coming months and the pace at which sustainability-linked financing expands across farming regions. The carbon framework introduces an additional variable, with premiums already quoted for verified low-emission beans, and conventional supply chains facing tighter financing conditions.

Idriss Linge