Demand fundamentals are also poor as weight-conscious consumers are cutting down on snacking.
In the U.S., which is the world largest chocolate market, retail sales of chocolate candy have seen little growth in the last two years. Sales by volume increased by just 0.6 percent in 2016 while sales by value were up 0.7 percent to $13.7 billion in the year up to December 25, according to data from Chicago-based market research firm IRI.
In 2015, volume sales fell 2.8 percent while dollar sales were up 3 percent to $13.6 billion, said IRI.
Annual cocoa production is about 4 million tons and many traders are expecting a supply surplus this year. The ICCO will release its projections for the current cocoa year later this month.
In China, retail volumes of chocolate likely fell 4 percent to 122,000 tons in 2016. Market research firm Euromonitor attributed this decline to a growing awareness about health, a slowdown in discretionary spending, and only marginal product innovation.