December ICE NY cocoa (CCZ26) closed down -1 (-0.02%) on Friday, while December ICE London cocoa #7 (CAZ26) fell -14 (-0.32%). Cocoa prices traded lower on Friday, retreating after demonstrating strength earlier in the week. Support emerged Wednesday when Ghana’s cocoa industry regulator proposed a +6% increase in farmer pay for the 2026/27 season. This proposed hike could incentivize Ghanaian farmers to withhold sales in pursuit of higher prices.
Last Wednesday, Barry Callebaut AG, the world’s largest cocoa processor, stated that the global cocoa market is well supplied, positioning the market to manage risks better than it did during the 2023/24 El Niño event that drove prices to record highs.
Larger supplies from the Ivory Coast are pressuring prices lower. Cumulative data from Tuesday revealed that farmers shipped 2.14 MMT of cocoa to ports during the current marketing year (October 1, 2025, through August 30, 2026), a +19% increase from the same period last year. Additionally, the Ivory Coast cocoa regulator, Le Conseil du Café Cacao, reported last Wednesday that the nation harvested 2.06 MMT of cocoa from June 2025 to June 2026, up +30% from 1.58 MMT a year earlier.
Rising inventories are negatively impacting prices. ICE cocoa inventories reached a two-year high of 3,436,742 bags last Friday before declining slightly to 3,415,952 bags this Friday.
Cocoa prices recently strengthened, with NY cocoa hitting an 11.25-month high last Monday and London cocoa reaching an 11.25-month high last Tuesday. Prices are underpinned by concerns over the quality of this year’s West African crops. Cloudy weather and limited sunshine in the Ivory Coast and Ghana are facilitating the spread of black pod disease, which is degrading cocoa bean quality.
Concerns regarding a smaller crop from Ghana, the world’s second-largest cocoa producer, provide bullish support for prices. On August 20, Ghana’s Cocoa Board announced that following a field survey of pod counts, the 2026/27 Ghana cocoa crop is estimated at 650,000 MT, down -13% from 750,000 MT last year.
Cocoa prices also find underlying support from early surveys of the 2026/27 Ivory Coast crop, which indicate below-average cherelle formation on cocoa trees, signaling a weak outlook for the main harvest beginning this month. Early assessments reveal poor pod development, with an average seasonal estimate of 1.8 MMT starting in September, down -18% from approximately 2.2 MMT in 2025/26.
On a positive note, StoneX reduced its 2026/27 global cocoa surplus estimate to 25,000 MT on July 29, down from an April forecast of 149,000 MT, citing risks to the West African crop from an expected El Niño. Furthermore, Transgraph Consulting forecast on July 23 that the global cocoa surplus will shrink to 80,000 metric tons in 2026-2027, down from 415,000 MT in 2025-2026, primarily due to an expected production decline to 4.87 MMT from 5.11 MMT.
In a bullish development, Ghana’s cocoa regulator, COCOBOD, projected on July 30 that Ghana’s 2026/27 cocoa production could fall to between 450,000 MT and 550,000 MT, down from the 750,000 MT projected for 2025/26, due to swollen shoot disease, aging farms, and adverse El Niño weather. However, current marketing year production is robust; Ghana’s cocoa board reported on August 26 that 750,000 MT has been harvested for the 2025/26 season, up +25.6% from 597,000 MT in 2024/25.
Cocoa prices have medium-term support from future weather concerns. On July 8, the US Climate Prediction Center noted that the El Niño weather pattern emerging across the equatorial Pacific last month will likely be one of the strongest in over 75 years. El Niño typically brings warmer, drier conditions to West Africa, reducing soil moisture, stressing cocoa trees, and lowering yields.
Cocoa demand was mixed in Q2. On July 16, the European Cocoa Association reported that Q2 European cocoa grindings fell -4.6% to 316,366 MT, exceeding the expected -1.5% y/y decline and marking the lowest Q2 level in six years. Conversely, the National Confectioners Association reported that Q2 North American cocoa grindings unexpectedly rose +7.7% y/y to 109,659 MT, well above the expected -1% y/y decline, easing demand fears. Asian demand also improved as the Cocoa Association of Asia reported Q2 Asian cocoa grindings rose +25% y/y to 224,646 MT, far above the expected +9% y/y increase.
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 is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
