Cocoa Futures Rally as Severe Weather Threatens West African Harvests

July ICE NY cocoa (CCN26) closed up +373 (+9.83%) on Tuesday, while July ICE London cocoa #7 (CAN26) gained +293 (+10.24%), pushing prices to 1.5-week highs.

Futures jumped amid aggressive fund short-covering, driven by heavy rainfall across the Ivory Coast that has triggered flooding and cut off farmers’ access to cocoa plantations. Prices also drew support from growing concerns that an emerging El Niño weather pattern could further threaten the West African cocoa crop.

On May 11, cocoa prices spiked to four-month highs as worries mounted that El Niño conditions could bring warmer, drier weather to the region, potentially damaging production. The U.S. National Oceanic and Atmospheric Administration estimates an 82% probability that El Niño conditions will develop between May and July and persist through year-end, with a 67% chance of a “Super El Niño.”

Early surveys of the 2026/27 West African cocoa crop add further support, showing below-average cherelle formation on cocoa trees—a sign of a weak outlook for the main harvest that begins in October.

Robust consumer demand for chocolate is also providing a floor for prices. Recent earnings from major producers Hershey and Mondelez International surprised to the upside, indicating steady chocolate sales despite elevated cocoa costs. However, Circana reported on April 14 that chocolate candy sales in North America during the 13 weeks ending March 22 fell 1.3% year-over-year.

Tightening global supply fundamentals have further bolstered the market. On April 29, StoneX reduced its 2026/27 global cocoa surplus forecast to 149,000 MT from a January estimate of 267,000 MT, citing El Niño-related risks to the West African crop. StoneX also lowered its 2025/26 surplus forecast to 247,000 MT from 287,000 MT.

The prolonged disruption to the Strait of Hormuz is compounding supply pressures. The closure has reduced fertilizer availability, driven up global shipping rates, insurance costs, and fuel prices—all of which raise import costs for cocoa buyers.

That said, some bearish factors persist. On May 14, the Ivory Coast raised its cocoa delivery estimate to 2.2 MMT for the 2025/26 season, up from a prior projection of 1.8–1.9 MMT, citing favorable weather. Cumulative shipments to ports have reached 1.64 MMT in the current marketing year, a 2.5% year-over-year increase. ICE cocoa inventories also climbed to a 1.75-year high of 2,745,277 bags on Tuesday.

Demand-side weakness is also evident. The National Confectioners Association reported on April 23 that North American Q1 cocoa grindings fell 3.8% year-over-year to 106,087 MT, while the European Cocoa Association said Q1 European grindings dropped 7.8% to 325,895 MT—the steepest Q1 decline in 17 years. By contrast, the Cocoa Association of Asia reported an unexpected 5.2% year-over-year rise in Q1 grindings to 223,503 MT.

Supply constraints in Nigeria, the world’s fifth-largest cocoa producer, are supportive for prices. On Tuesday, Bloomberg reported that Nigerian cocoa exports in March fell 35% year-over-year to 18,052 MT. Nigeria’s Cocoa Association projects 2025/26 production will drop 11% to 305,000 MT from 344,000 MT in 2024/25.

Recent rainfall in West Africa has done little to ease drought concerns. As of March 29, the African Flood and Drought Monitor showed drought conditions covering more than half of the Ivory Coast and roughly two-thirds of Ghana.

Compounding the production outlook, Ghana cut the official price paid to farmers by nearly 30% for the 2025/26 season, and the Ivory Coast announced a 57% reduction in farmer pay for the mid-crop harvest. Together, the two countries account for more than half of global cocoa output.

The Ivory Coast projected its 2025/26 production would decline 10.8% to 1.65 MMT from 1.85 MMT the prior year. Rabobank similarly trimmed its 2025/26 global surplus estimate to 250,000 MT from a November forecast of 328,000 MT.

On the bearish side, the International Cocoa Organization raised its 2024/25 global surplus estimate to 75,000 MT from 49,000 MT in November—the first surplus in four years—after production climbed 8.4% year-over-year to 4.7 MMT.

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