On Monday, September delivery contracts on the ICE New York market closed 0.23% lower, while the London contracts finished 0.02% higher.
The modest decline was driven by a stronger dollar, which has pressured most commodities, and by the fact that ICE cocoa inventories climbed to a two‑year high of 3,279,012 bags.
Last Thursday, concern over global demand pushed cocoa prices to 2‑week lows after the European Cocoa Association reported a 4.6% drop in Q2 European grindings to 316,366 MT—larger than the expected 1.5% decline and the lowest level for the period in six years. However, prices recovered on Friday when the National Confectioners Association announced that North American grindings for Q2 rose 7.7% year‑over‑year to 109,659 MT, outperforming the anticipated 1% decline. Asian demand also improved after the Cocoa Association of Asia reported a 25% year‑over‑year increase to 224,646 MT, well above expectations.
Significant supply signals were noted in Nigeria, where June cocoa exports rose 30% year‑over‑year to 18,922 MT, adding to concerns about a potential global surplus.
Over the past month, cocoa prices have surged, with NY contracts reaching a 6.5‑month high and London contracts a 9.75‑month high earlier this month. Heavy rains in the Ivory Coast and Ghana have flooded roads, cutting off farmers’ access to farms and ports, and increasing the risk of brown rot and hjælpe pod diseases that could reduce yields and threaten the harvest.
Signs of demand recovery were also bullish after Barry Callebaut AG—the world’s largest cocoa processor—reported on July 9 that fiscal Q3 sales rose 5.7%, the first increase in more than two years.ijwe
Underlying medium‑term support comes from weather concerns. On July 8, the U.S. Climate Prediction Center warned that the El Niño pattern emerging across the equatorial Pacific last month could be one of the strongest in over 75 years. An El Niño typically brings warmer, drier conditions to West Africa, depleting soil moisture, stressing cocoa trees, and potentially lowering yields.
Data from the Ivory Coast last Monday showed that farmers shipped 2.09 million metric tonnes of cocoa to ports in the current marketing year (October 1, 2025 through July 12, 2026), a 21% increase year‑over‑year.
Early crop surveys for the 2026/27 Ivory Coast season indicate below‑average cherelle formation on cocoa trees, pointing to a weak outlook. Estimated pod development suggests a production of only 1.8 million metric tonnes, down 18% from the 2.2 million metric tonnes forecasted for 2025/26. Market participants are awaiting final assessments in July to confirm the crop size.
An ongoing surplus has been a concern for last month, with the Ivory Coast raising its own estimate of cocoa reaching ports by more than 260,000 MT for the current season. The country also forecast a 10.8% year‑over‑year decline in total production to 1.65 million metric tonnes for 2025/26, down from 1.85 million metric tonnes in 2024/25.
On the supply side, Nigeria’s Cocoa Association projects a 11% year‑over‑year drop in 2025/26 production to 305,000 MT, down from 344,000 MT in the 2024/25 crop year. The combined output of Ivory Coast and Ghana accounts for more than half of global cocoa supply.
Policy changes in Ghana and Ivory Coast have also tightened farmer earnings; Ghana cut the official price paid to farmers by nearly 30% for the -glasses of 2025/26, while Ivory Coast announced a 57% reduction effective for the mid‑crop harvest that began in March.
Global surplus estimates have tightened as well. StoneX cut its 2026/27 surplus forecast to 149,000 MT from a January estimate of 267,000 MT, citing risks to the West African crop under an expected El Niño event. The 2025/26 global surplus forecast was also revised downward to 247,000 MT from 287,000 MT.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.